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How much does Valbridge Property Advisors cost?
Initial Investment Range
$69,914 to $163,529
Franchise Fee
$40,164 to $93,529
You will operate a business that appraises commercial, industrial, and residential real property, closely held businesses, and tangible property, such as furniture and equipment, and provides consulting services relating to those assets and improving the value of them.
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Valbridge Property Advisors May 1, 2024 FDD Risk Analysis
Free FDD Library AI Analysis Date: July 16, 2025
DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
Financial statements for Valbridge Property Advisors Franchising System, LLC (Valbridge LLC) show a significant decline in profitability, with net income dropping from over $934,000 in 2022 to approximately $274,000 in 2023. Additionally, a large and increasing 'Due from member' balance suggests cash is being transferred from the franchisor to its parent company. These factors, combined with other disclosures, may indicate financial strain and an inability to support franchisees.
Potential Mitigations
- Your accountant must conduct a thorough analysis of the audited financial statements, including footnotes and the cash flow statement, to assess solvency and operational trends.
- A comprehensive review of the increasing receivable from the parent company should be undertaken by your financial advisor to understand its impact on the franchisor's health.
- Discuss the franchisor's financial stability and its ability to provide support with your business advisor, considering the significant income drop.
High Franchisee Turnover
High Risk
Explanation
Item 20, Table 3 reveals an exceptionally high turnover rate. At the start of 2023, there were 43 franchised units. During 2023, every single one of these units 'Ceased Operations for Other Reasons,' leaving zero franchisees at the end of the year. This 100% system exit is a critical red flag, strongly suggesting a systemic failure, franchisee dissatisfaction, or a fundamental, undisclosed business model change that presents extreme risk to a new franchisee.
Potential Mitigations
- You must ask the franchisor for a direct and detailed explanation for the 100% franchisee exit in 2023, and your attorney should evaluate the response.
- Contacting a significant number of the 58 former franchisees listed in Exhibit D is essential to understand their reasons for leaving; a business advisor can help structure these inquiries.
- Given the system-wide cessation, a thorough re-evaluation of the entire business opportunity with your attorney and accountant is critical.
Rapid System Growth
Low Risk
Explanation
This risk was not identified in the FDD package. Rapid system growth can strain a franchisor's ability to provide adequate support. However, Valbridge LLC's Item 20 data shows the opposite: a complete system exit in 2023. The risk here is not from rapid growth but from system collapse, which is an even more significant concern.
Potential Mitigations
- It is important to have your business advisor analyze growth trends shown in Item 20 to ensure the franchisor can support its network.
- Asking existing franchisees about the quality of support during periods of growth can provide valuable insight.
- Your accountant should review the franchisor's financial statements to determine if capital is sufficient to sustain growth and support franchisees.
New/Unproven Franchise System
High Risk
Explanation
Valbridge LLC began franchising in 2013, so it is not a new system. However, the 100% franchisee exit in 2023, as shown in Item 20, suggests the business model may be unproven or has failed in its previous iteration. This presents a risk similar to that of a new system, as its viability under the current offering is unknown and lacks a successful track record with active franchisees.
Potential Mitigations
- A business advisor should help you investigate the reasons for the 2023 system-wide cessation of operations to understand the viability of the current model.
- Extensive discussions with former franchisees listed in Exhibit D are crucial to gauge the potential for success.
- Your attorney should seek stronger contractual protections or more favorable terms to offset the high risk associated with this unproven relaunch.
Possible Fad Business
Low Risk
Explanation
The business of property appraisal is a well-established professional service and not typically considered a fad. However, the specific business model and value proposition offered by Valbridge LLC may have failed, as suggested by the 100% franchisee exit in 2023 disclosed in Item 20. The risk is not that the industry is a fad, but that this specific franchise model may not be sustainable or competitive.
Potential Mitigations
- It is wise to have a business advisor help you research the long-term demand and competitive landscape for franchised appraisal services.
- Scrutinize the franchisor's plans for innovation and adaptation to market changes with your financial advisor.
- Assessing the business model's resilience to economic shifts and competition is a key task for your accountant.
Inexperienced Management
High Risk
Explanation
Item 2 indicates that the key managers and officers of the parent company have extensive experience in the appraisal industry, with many having operated their own appraisal firms for decades. However, the franchisor's ability to manage a successful franchise system is in serious question given the disclosure in Item 20 that all 43 franchisees ceased operations in 2023. The management team's prior experience did not prevent this apparent system-wide failure.
Potential Mitigations
- Inquiring directly about what management has changed since the 2023 system-wide exit is a critical step to take with your business advisor.
- Speaking with former franchisees about their experiences with management and the support provided is essential.
- Your attorney should help you assess whether the management team's experience is relevant to successfully rebuilding a franchise system from zero.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package. The document does not state that Valbridge LLC or its parent is owned by a private equity firm. However, the franchisor is part of a multi-layered corporate structure. The ultimate ownership and its potential impact on long-term strategy should be a point of discussion.
Potential Mitigations
- It is beneficial to research the ownership structure of any franchisor with your business advisor to understand their investment horizon.
- Speaking with franchisees about any changes since an ownership change can provide crucial information.
- Your attorney can help you understand your rights if the franchise system is sold to another company.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. The franchisor, Valbridge LLC, is a wholly owned subsidiary of Valbridge Property Advisors, Inc. ('VPA'), and this parent is disclosed in Item 1. The FDD includes financial statements for the franchisor entity itself. It does not appear that parent company financials are required or have been omitted.
Potential Mitigations
- An attorney can help verify the franchisor's corporate structure and determine if a parent company's financials should have been disclosed.
- If a parent company provides essential services or guarantees, your accountant should insist on reviewing their financial statements for a complete risk picture.
- Understanding the full corporate structure is a key piece of due diligence for you and your business advisor.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 discloses a predecessor to the parent company, Cambridge Property Advisors, Inc., but provides no negative history. While information is limited, there are no direct red flags associated with the predecessor itself. The most significant historical issues relate to the current franchisor's own recent operating history.
Potential Mitigations
- Your attorney should carefully review all information about a franchisor's predecessors in the FDD.
- Independent research into a predecessor's business history can sometimes reveal past issues; your business advisor can assist with this.
- Asking long-term franchisees about their experience under any previous ownership can offer valuable context.
Pattern of Litigation
Medium Risk
Explanation
Item 3 discloses one recent lawsuit filed by a former franchisee alleging intentional interference with contract and breach of fiduciary duty. Valbridge LLC settled this case by paying the former franchisee $70,000. While not a broad pattern, this single, serious case resulting in a settlement payment could indicate potential problems in the franchisor's relationships with its franchisees and its business practices, warranting careful consideration.
Potential Mitigations
- Your attorney should carefully review the details and allegations of any litigation disclosed in Item 3.
- It is prudent to discuss the litigation with former franchisees to gain their perspective on the underlying issues.
- Considering the nature of the allegations, a discussion with your business advisor about the potential for similar disputes is warranted.
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