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How much does U-Swirl Frozen Yogurt cost?
Initial Investment Range
$418,500 to $3,379,600
Franchise Fee
$27,500 to $105,000
Franchised businesses provide self-service frozen yogurt and beverages and other frozen dessert products under the marks “U-Swirl Frozen Yogurt,” “CherryBerry”, “Yogurtini”, “Yogli-Mogli”, “Aspen Leaf Yogurt”, “Let’s Yo!” or “Fuzzy Peach”.
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U-Swirl Frozen Yogurt April 11, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: August 21, 2025
DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
Medium Risk
Explanation
The franchisor, U Swirl Franchising LLC (USF), is a new entity formed in 2023 that acquired an existing system. While its initial financials appear profitable, this short track record provides limited insight into long-term stability. A footnote mentions the settlement of a $1 million liability through an undefined "comprehensive transactional agreement," which introduces uncertainty. You should carefully consider the financial risk associated with a newly formed franchisor entity running an established but previously troubled system.
Potential Mitigations
- Your accountant should analyze the audited financials, especially the cash flow statement and all footnotes, to assess the franchisor's health.
- Ask your business advisor to help you evaluate the risks associated with a new franchisor entity operating an established brand.
- Inquire with your attorney about the implications of the vague settlement of the large promissory note mentioned in the financial statement footnotes.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a significant risk. The total number of franchised outlets declined from 71 to 57 between the start of 2022 and the end of 2023. In those two years under the predecessor, a combined 17 units "Ceased Operations for Other Reasons," indicating a high rate of closures. While 2024 showed stability under the new owner, this recent history of significant system shrinkage is a major warning sign about the historical health of the franchise.
Potential Mitigations
- It is critical to contact a significant number of former franchisees listed in Exhibit D to understand why they left the system.
- Discuss the high historical closure rate and shrinking system size with your business advisor to assess the long-term viability.
- Your accountant should help you factor this high historical failure rate into your financial projections and risk assessment.
Rapid System Growth
Low Risk
Explanation
This risk was not identified, as the data in Item 20 indicates the franchise system has been shrinking or stable in recent years, not growing rapidly. Rapid growth can strain a franchisor's ability to provide adequate support. While not a risk here, you should always evaluate if a franchisor has the infrastructure and financial resources to support its stated growth plans.
Potential Mitigations
- Consulting with your business advisor can help assess whether a franchisor's support systems are adequate for its size and growth trajectory.
- An accountant's review of the franchisor's financials can reveal if they are investing sufficiently in support infrastructure.
- Speaking with a range of existing franchisees provides real-world insight into the quality and responsiveness of franchisor support.
New/Unproven Franchise System
Medium Risk
Explanation
While the franchise brands have existed for years, the franchisor entity itself is new, formed in 2023 to acquire the system's assets. Management appears to have experience with other franchise systems. However, a new ownership structure for a system that has seen significant decline, as shown in Item 20, presents risks regarding their ability to successfully stabilize and support the brand. You are investing in this new management's ability to turn things around.
Potential Mitigations
- Engaging a business advisor to research the track record of the new management team and their other ventures is a prudent step.
- You should ask your attorney to help you formulate questions for the franchisor regarding their specific plans to stabilize and grow the system.
- It would be wise to speak with franchisees who have operated under both the old and new management to compare support levels.
Possible Fad Business
High Risk
Explanation
The self-serve frozen yogurt market has matured significantly, and some might consider it a business concept that has passed its trend phase. The FDD's Item 20 data, showing a net decline in outlets over the past few years, could support this view. You face the risk of investing in a business model with potentially declining consumer interest and a highly competitive market, which could impact long-term viability and profitability.
Potential Mitigations
- A business advisor can help you conduct independent market research to assess the current and future local demand for self-serve frozen yogurt.
- Developing a business plan with your accountant that accounts for a highly competitive and potentially mature market is crucial.
- You should speak with current franchisees about recent sales trends and their strategies for remaining competitive.
Inexperienced Management
Low Risk
Explanation
This risk was not identified, as Item 2 indicates the franchisor's key executives have considerable prior experience in the restaurant industry and with other franchise systems. Experienced management is generally a positive factor, as it can lead to better support and more proven operational systems. However, it does not guarantee success and must be weighed against the system's historical challenges.
Potential Mitigations
- It is still a valuable practice to have your business advisor research the specific track record of the management team within the franchise industry.
- You should prepare questions for the management team about their specific vision and plans for this brand.
- Speaking with franchisees about their direct experiences with the management team's support is highly recommended.
Private Equity Ownership
Low Risk
Explanation
The FDD does not explicitly state that the franchisor is owned by a private equity firm. Private equity ownership can sometimes lead to decisions that prioritize short-term investor returns over the long-term health of franchisees. While not a specified risk here, the complex ownership structure and recent acquisition of the system are factors to note.
Potential Mitigations
- Your attorney can help you investigate the ownership structure and background of the parent companies listed in Item 1.
- Asking the franchisor directly about their long-term strategy and expected investment horizon can provide valuable insight.
- Speaking with franchisees about any changes in system focus since the new ownership took over is advisable.
Non-Disclosure of Parent Company
Medium Risk
Explanation
The FDD discloses parent companies, but their financial statements are not provided, and they do not guarantee the franchisor's obligations. You are contracting with a very new entity, and without financial information on the parents, it is difficult to assess the overall financial strength and backing of the organization you are joining. This lack of transparency into the parent companies' financial health increases your risk.
Potential Mitigations
- Your accountant should carefully evaluate the franchisor's own financials for any signs of undercapitalization.
- It is advisable to ask your attorney about the legal implications of contracting with a new subsidiary whose parents do not provide a financial guarantee.
- You could inquire with the franchisor if they are willing to provide parent financials or a parent guarantee.
Predecessor History Issues
High Risk
Explanation
Item 1 discloses that the current franchisor acquired the system from a predecessor in 2023. The data in Item 20 shows the system was shrinking significantly under this predecessor, with a high number of unit closures. This history suggests there may be underlying systemic problems with the business model or historical support that the new management must overcome. You are taking a risk on the new owner's ability to fix the predecessor's issues.
Potential Mitigations
- You should ask your business advisor to help you assess the new franchisor's specific plans for addressing the issues that may have caused the historical decline.
- It is critical to contact former franchisees from the predecessor's era (listed in Exhibit D) to understand their experiences.
- Your attorney can help you understand if any of the predecessor's liabilities were assumed by the new franchisor.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified, as Item 3 of the FDD states there is no litigation that requires disclosure. A clean litigation history is a positive sign. However, this does not mean disputes have never occurred, only that they have not met the specific criteria for mandatory disclosure in the FDD.
Potential Mitigations
- It is still a valuable exercise to speak with current and former franchisees about any disputes they may be aware of.
- Your attorney can conduct public record searches for litigation involving the franchisor or its principals as an extra precaution.
- Understanding the dispute resolution process outlined in the Franchise Agreement is important, should a future conflict arise.
Disclosure & Representation Risks
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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Financial & Fee Risks
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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Legal & Contract Risks
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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Territory & Competition Risks
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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Regulatory & Compliance Risks
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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Franchisor Support Risks
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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Operational Control Risks
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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Term & Exit Risks
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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Miscellaneous Risks
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