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Varsity Zone
How much does Varsity Zone cost?
Initial Investment Range
$204,046 to $443,679
Franchise Fee
$96,090 to $231,090
We offer qualified individuals the right to operate a business which specializes in commercial and residential heating, ventilation, and air conditioning installation, maintenance, and repair services.
Enjoy our partial free risk analysis below
Unlock the full risk analysis to access 9 more categories covering 100+ risks.
Varsity Zone April 29, 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.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The franchisor's audited financial statements for the year ending December 31, 2024, show a significant net loss of ($887,382) on revenues of only $212,437. A note also states the company has incurred losses and negative cash flows from operations and has received a commitment from its majority member to provide additional funding. This financial weakness may impact its ability to provide support and grow the brand, posing a substantial risk to your investment.
Potential Mitigations
- A franchise accountant should thoroughly analyze the financial statements, including all notes, to assess the franchisor's viability and dependence on new franchise sales.
- Inquire with your attorney about whether the franchisor has been required by any state to post a bond or escrow fees due to its financial condition.
- Ask the franchisor directly about their detailed plan to reach profitability and how they will support franchisees during this period.
High Franchisee Turnover
High Risk
Explanation
The FDD discloses that as of the end of 2024, there are six franchised outlets. However, a footnote clarifies these are all owned and operated by the franchisor's founder, not independent third parties. Therefore, there is no history of franchisee turnover because there is no history of independent franchisee operations. This lack of data from independent operators is itself a significant risk, as the system's viability in the hands of franchisees is untested.
Potential Mitigations
- Your business advisor should help you recognize the heightened risk associated with a system that has no track record of independent franchisee success.
- Contact the founder-owned locations listed in Item 20 to understand their operational experience, but be aware their perspective may differ from a true franchisee's.
- A franchise attorney can help you weigh the risks of joining a system with no independent franchisee operating history.
Rapid System Growth
Medium Risk
Explanation
Item 20 data indicates that while no independently-owned franchises were operational at the end of 2024, there are 32 franchise agreements signed for outlets that are not yet open. This indicates extremely rapid initial sales for a brand-new system. Such fast growth may strain the new franchisor's resources, potentially leading to inadequate training, site selection assistance, and ongoing support for all new franchisees.
Potential Mitigations
- A business advisor can help you question the franchisor about their specific plans and personnel for supporting this rapid influx of new franchisees.
- Scrutinize the experience of the support staff listed in Item 2 to assess their capacity to handle this growth.
- You should ask your accountant to review the franchisor's financials in Item 21 to evaluate if they have allocated sufficient capital to build out their support infrastructure.
New/Unproven Franchise System
High Risk
Explanation
HPB HVAC LLC (HPB HVAC) is a new franchisor, formed in July 2023 and beginning to franchise in June 2024. The system has no operating history with independent franchisees, and its management, while experienced in other brands, is new to this specific concept. Furthermore, its financials show a significant net loss. Investing in a new, unproven system carries higher risks, including the potential for an unrefined business model and inadequate support.
Potential Mitigations
- Engage a business advisor to perform extensive due diligence on the viability of the business model and the experience of the management team.
- Your accountant must carefully evaluate the franchisor's capitalization and financial stability disclosed in Item 21.
- An experienced franchise attorney can help you negotiate for more favorable terms to compensate for the heightened risk of joining an unproven system.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. A fad business is one that enjoys rapid growth based on a short-term trend but lacks long-term consumer demand. Investing in such a concept is risky because your long-term franchise agreement could easily outlast the public's interest in the product or service, potentially leading to business failure.
Potential Mitigations
- A business advisor can help you conduct independent market research to assess the long-term demand and sustainability for the products or services offered.
- It is wise to analyze market trends and competition to determine if the business has a durable competitive advantage.
- Your financial advisor can assist in evaluating the business model's resilience to economic shifts and changing consumer tastes.
Inexperienced Management
Medium Risk
Explanation
The management team has experience with other franchise brands under the Horsepower Brands umbrella but has very limited history—less than a year—operating this specific Varsity Zone HVAC concept. Their experience is in franchising multiple concepts, but not necessarily in the long-term, successful operation of this particular business model. This could affect the quality of industry-specific support and strategic direction you receive.
Potential Mitigations
- During your due diligence calls, ask the founder-owned locations detailed in Item 20 about the management team's specific HVAC industry knowledge and the quality of operational guidance.
- A business advisor can help you assess whether the management's general franchising experience is sufficient given their limited tenure with this specific concept.
- You should ask the franchisor directly about the specific HVAC operational experience of the team that will be providing you with support.
Private Equity Ownership
Medium Risk
Explanation
The franchisor, HPB HVAC, is part of a large portfolio of brands under a parent company, which presents similar risks to private equity ownership. Decisions may prioritize overall portfolio returns rather than the long-term health of a single brand. The Franchise Agreement gives the franchisor the right to sell or assign the agreement, meaning ownership could change, potentially altering the support and philosophy of the system you invested in.
Potential Mitigations
- It is important to discuss with your business advisor the potential impacts of being part of a large, multi-brand franchise organization.
- Speaking with franchisees from other brands within the Horsepower portfolio could provide insight into the parent company's management style.
- Your attorney should review any clauses related to the sale or assignment of the franchise system to understand the potential implications of an ownership change.
Non-Disclosure of Parent Company
Medium Risk
Explanation
The franchisor discloses its parent company, JEZ Investments LLC, and a complex web of affiliates under the Horsepower Brands umbrella. However, financial statements are not provided for the parent or these affiliates, other than the franchisor entity itself. Given the franchisor's weak financial state and reliance on these affiliates for critical services, the lack of financial disclosure for the parent entity limits your ability to fully assess the overall financial stability of the entire organization.
Potential Mitigations
- A franchise attorney can advise on whether the parent company's financials should have been disclosed under franchise rules given the circumstances.
- Your accountant should carefully analyze the disclosed related-party transactions in the franchisor's financial notes to understand the financial dependency.
- You should recognize the limited visibility into the parent company's financial health as a key risk factor in your evaluation.
Predecessor History Issues
Low Risk
Explanation
The FDD discloses that HPB HVAC acquired assets from a predecessor, Amped Services Plus, Inc., in June 2023. The Item 19 financial performance representation is based on this predecessor's converted operations. While the relationship is disclosed, you must be cautious that the predecessor's operational history, even if positive, may not be fully representative of performance under the new franchisor's management and systems.
Potential Mitigations
- A business advisor can help you question the franchisor about what specific systems, personnel, and operational methods have changed since the acquisition from the predecessor.
- You should treat any financial data from the predecessor period with caution, understanding that new ownership can materially alter business performance.
- In discussions with your attorney, clarify any liabilities or obligations that may have been carried over from the predecessor.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses two pending lawsuits against affiliated franchisors (HPB Lawn Care and HPB Foam) and their shared management. The claims are serious and include fraudulent misrepresentation, fraud in the inducement, and breach of contract. While not directly against HPB HVAC, these actions suggest a pattern of significant franchisee disputes within the parent organization, Horsepower Brands. This indicates a higher risk of potential conflict and litigation within the broader system.
Potential Mitigations
- Your franchise attorney must carefully review the details of the litigation disclosed in Item 3 to understand the nature of the allegations.
- This pattern of disputes within the parent system should be a major topic of discussion with your legal and business advisors.
- It would be prudent to ask the franchisor to explain the circumstances of these lawsuits and what steps are being taken to address franchisee concerns system-wide.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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