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Uptown Cheapskate

Uptown Cheapskate Franchise System, LLC
https://www.uptowncheapskatefranchise.com
1-801-359-0071
39 East Eagle Ridge Drive, #100, North Salt Lake, Utah 84054
FDD Version:

How much does Uptown Cheapskate cost?

Initial Investment Range

$328,002 to $1,193,004

Franchise Fee

$40,000 to $80,000

Uptown Cheapskate® franchises the right to use its trade name and system to sell used and new teen and young adult products to the public.

Enjoy our partial free risk analysis below

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Uptown Cheapskate April 11, 2025 FDD Risk Analysis

Free FDD Library AI Analysis Date: August 22, 2025

DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.

1

Franchisor Stability Risks

Start Here
Total: 10
1
4
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor's parent company, which guarantees its performance, has reported significant net losses in its audited financial statements for the past two fiscal years, totaling over $4.2 million. While equity remains positive, these persistent losses and reliance on substantial debt financing could potentially impact its long-term ability to adequately support franchisees, fund system growth, and fulfill its obligations without relying on new franchise sales.

Potential Mitigations

  • An experienced franchise accountant must review the consolidated financial statements, including footnotes on debt and revenue sources, to assess financial viability.
  • It is important to discuss the company's strategy for achieving profitability with your financial advisor.
  • Your attorney should confirm the enforceability and strength of the parent company guarantee.
Citations: Item 1, Item 21, Exhibit G

High Franchisee Turnover

Medium Risk

Explanation

While the number of closures is low, Item 20 and the 'Special Risks' section reveal a significant number of franchises (53) have been sold but are not yet open. This large pipeline could indicate systemic delays in site selection, financing, or build-out. If other franchisees experience delays, it may suggest you could face similar challenges, impacting your timeline and initial costs.

Potential Mitigations

  • Discussing the typical and maximum time-to-open with a wide range of both new and established franchisees is crucial.
  • Your business advisor can help you develop a detailed project plan with contingencies for potential delays.
  • Clarifying the reasons for the large number of unopened units with the franchisor is advisable before making a commitment.
Citations: Special Risks Section, Item 20

Rapid System Growth

Low Risk

Explanation

The franchise system has experienced steady growth, expanding from 83 to 129 franchised units over the past three years. While rapid growth can sometimes strain a franchisor's support resources, the company appears to have a substantial support structure through its affiliate, BaseCamp, which may mitigate this risk. However, monitoring the quality of support remains important.

Potential Mitigations

  • Engaging with recent franchisees to inquire about the quality and timeliness of support during their opening process can provide valuable insight.
  • A conversation with your business advisor about the franchisor's support staff-to-franchisee ratio would be prudent.
  • Your attorney should review the franchisor's specific support obligations outlined in Item 11.
Citations: Item 1, Item 11, Item 20

New/Unproven Franchise System

Medium Risk

Explanation

The current franchisor entity was formed in 2022 and acquired the system from a predecessor. The FDD explicitly flags the franchisor's 'Short Operating History' and a recent 'Ownership Change' as special risks. While the brand itself is established, this change in ownership and management introduces uncertainty regarding the quality of future support and the long-term strategic direction of the system.

Potential Mitigations

  • Consulting with franchisees who have operated under both the old and new ownership can reveal changes in support or culture.
  • A business advisor can help you research the track record of the new parent company, BaseCamp, and its principals.
  • Your attorney should examine the transfer of rights and obligations from the predecessor to the new entity.
Citations: Special Risks Section, Item 1, Item 2

Possible Fad Business

Low Risk

Explanation

This risk was not identified. The resale clothing industry is well-established, and the predecessor business has operated since 2009, demonstrating a history of sustained consumer demand. This longevity suggests the business model is not based on a short-term fad. A strong business model should be resilient to shifts in fashion and economic cycles.

Potential Mitigations

  • A business advisor can help you analyze the long-term trends and competitive landscape in the local resale market.
  • Reviewing the franchisor's plans for staying current with fashion and retail trends is a worthwhile discussion to have with them.
  • An accountant can assist in modeling financial performance under various economic scenarios.
Citations: Not applicable

Inexperienced Management

Low Risk

Explanation

This risk was not identified in the FDD. Item 2 details a management team that includes founders from the predecessor company as well as executives with significant prior experience at other large, successful franchise systems in the resale industry. This level of combined experience in both the specific business model and franchising generally mitigates this risk.

Potential Mitigations

  • Even with experienced management, discussing their specific vision and strategy with a business advisor is a good practice.
  • Inquiring with current franchisees about their direct interactions and satisfaction with the leadership team can provide useful context.
  • Your attorney can review the employment backgrounds provided in Item 2 for any potential concerns.
Citations: Item 2

Private Equity Ownership

Medium Risk

Explanation

The franchisor's parent company recently underwent a significant change in ownership, with an outside entity acquiring a 60% stake in a transaction characteristic of a private equity buyout. This ownership structure may create pressure to prioritize short-term financial returns for investors, which could potentially conflict with the long-term health of the franchise system and individual franchisee profitability. Franchisee support could be impacted by cost-cutting measures.

Potential Mitigations

  • A business advisor can help you research the acquiring entity and its track record with other portfolio companies, if any.
  • Discussing any changes in philosophy or support levels since the ownership change with franchisees is critical.
  • Your attorney should review the franchisor's right to sell or assign the system, which is common in these structures.
Citations: Item 1, Exhibit G (Note 3)

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified. The FDD clearly outlines the parent company structure in Item 1 and provides audited, consolidated financial statements for the parent entity in Item 21 and Exhibit G. Full disclosure of parent companies is important because a franchisor's stability can be heavily influenced by the financial health and decisions of its parent.

Potential Mitigations

  • Your accountant should carefully review the provided parent company financials and any parent guarantees.
  • It is wise to have your attorney confirm the relationships between the various entities described in Item 1.
  • A business advisor can help you understand the roles and responsibilities of each entity in the corporate structure.
Citations: Not applicable

Predecessor History Issues

Medium Risk

Explanation

The FDD in Item 3 discloses that the franchisor's predecessor was involved in an arbitration case that resulted in a significant financial judgment against it. The arbitrator found that the predecessor failed to properly advise a franchisee regarding their lease. This history, involving the same system you are considering buying into, could suggest potential weaknesses in past support processes that you should be aware of.

Potential Mitigations

  • Your attorney should carefully review the details of the litigation disclosed in Item 3.
  • It is important to ask the franchisor what specific changes have been implemented to prevent similar issues from occurring under the new ownership.
  • Discussing the quality of real estate and lease negotiation support with current franchisees would be a prudent step.
Citations: Item 1, Item 3

Pattern of Litigation

Low Risk

Explanation

This risk was not identified. Item 3 discloses a single past arbitration action involving the franchisor's predecessor, but it does not indicate a pattern of litigation against the franchisor. A pattern of lawsuits, especially those initiated by franchisees alleging fraud or breach of contract, can be a major red flag about the health and integrity of a franchise system.

Potential Mitigations

  • Your attorney should still review the single disclosed action in Item 3 for any relevant insights.
  • Independent online searches for news or discussions involving the franchisor can sometimes uncover disputes not required to be disclosed.
  • Regularly monitoring public court records for new filings against a franchisor is a due diligence step a business advisor might suggest.
Citations: Not applicable
2

Disclosure & Representation Risks

Total: 15
1
5
9

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

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3

Financial & Fee Risks

Total: 10
3
6
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

4

Legal & Contract Risks

Total: 16
5
5
6

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

5

Territory & Competition Risks

Total: 5
2
2
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

6

Regulatory & Compliance Risks

Total: 10
4
3
3

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

7

Franchisor Support Risks

Total: 4
1
3
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

8

Operational Control Risks

Total: 12
1
7
4

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

9

Term & Exit Risks

Total: 18
7
8
3

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

10

Miscellaneous Risks

Total: 2
1
1
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.