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Take the Quiz & Get MatchedVenture X
How much does Venture X cost?
Initial Investment Range
$346,500 to $3,377,000
Franchise Fee
$184,500 to $939,000
The company offers qualified parties a franchise for the right to independently own and operate a business that provides co-working office space and meeting rooms.
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Venture X April 30, 2025 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
Medium Risk
Explanation
While the 2024 financial statements for Venture X Franchising, LLC (VTX) show profitability and positive equity, the Maryland state addendum discloses that regulators required the franchisor to post a surety bond due to its financial condition. This regulatory action suggests a perceived financial risk that may not be immediately apparent from the primary financial statements alone, potentially affecting VTX's ability to support you.
Potential Mitigations
- Your accountant must review the financials, footnotes, and the surety bond disclosure to assess the true financial health and support capability of the franchisor.
- Discuss the implications of the Maryland surety bond requirement and what it signifies about the franchisor's financial stability with your franchise attorney.
- A business advisor can help you evaluate if the potential financial weakness of the franchisor poses an acceptable risk to your investment.
High Franchisee Turnover
Medium Risk
Explanation
Item 20 data from 2022-2024 shows a consistent number of franchise terminations each year, with the number increasing from two in 2022 to five in 2024. While the overall percentage is not extreme, this upward trend in terminations could indicate growing franchisee dissatisfaction or other systemic challenges. This pattern warrants investigation into the reasons why a growing number of franchisees are leaving the system through termination.
Potential Mitigations
- It is critical to contact former franchisees, especially those who were terminated, to understand the reasons for their exit; your attorney can help frame appropriate questions.
- Engage an accountant to analyze the turnover rates and compare them against any available industry benchmarks for co-working franchises.
- Discuss the reasons for the increasing number of terminations directly with the franchisor, with guidance from your business advisor.
Rapid System Growth
High Risk
Explanation
The franchisor projects opening 19 new locations in the next fiscal year, on top of 69 franchise agreements already signed but not yet open. This represents a potential growth of over 30% to the current system size of 61 outlets in a single year. Such rapid expansion could potentially strain the franchisor's ability to provide adequate training, site selection assistance, and ongoing operational support to all franchisees, both new and existing.
Potential Mitigations
- Question the franchisor on their plans and capacity for scaling support infrastructure to match this projected growth, with input from your business advisor.
- Ask current franchisees, particularly those who opened recently, about the quality and responsiveness of the franchisor's support systems.
- Your accountant should review the franchisor's financial statements to assess if they have allocated sufficient resources to support this rapid expansion.
New/Unproven Franchise System
Low Risk
Explanation
This risk was not identified in the FDD package. The franchisor, Venture X Franchising, LLC (VTX), commenced franchising in 2016, providing it with several years of operational history. A new system can pose risks due to unproven business models and support structures, but that does not appear to be the case here.
Potential Mitigations
- When evaluating any franchise, it is prudent for your business advisor to assess the maturity and stability of the brand and its operating systems.
- An accountant should always review the franchisor's financial history to verify its track record and sustainability.
- Your attorney can help confirm the franchisor's history as stated in the FDD to ensure there are no undisclosed, short-lived predecessor entities.
Possible Fad Business
Low Risk
Explanation
The co-working industry is subject to significant market fluctuations based on economic conditions and evolving workplace trends, such as the recent increase in remote and hybrid work models. While not a short-term fad, the long-term demand and profitability for this type of business can be volatile. Your success may depend on the franchisor's ability to adapt its model to these ongoing changes in the office space market.
Potential Mitigations
- Conduct independent market research with a business advisor to assess the long-term demand for co-working spaces in your specific local area.
- Question the franchisor about their strategies for adapting to changing work trends and competition from other flexible office solutions.
- A financial advisor can help you model different scenarios to account for potential market volatility.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD. Item 2 shows that the key personnel of VTX and its affiliate, United Franchise Group, have extensive and long-term experience in franchising across multiple brands. Inexperienced management can be a significant risk, as it may lead to poor support and strategic errors, but the management team here appears to be highly experienced.
Potential Mitigations
- When evaluating any franchise opportunity, it's wise to have a business advisor help you research the background and track record of the franchisor's key executives.
- Speaking with current franchisees can provide valuable insight into their confidence in the management team's leadership and support.
- Your attorney can help verify the professional histories disclosed in Item 2 of the FDD.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified. Item 1 indicates the franchisor is part of the United Franchise Group, which is a portfolio of affiliated brands, rather than being owned by a typical private equity firm focused on short-term returns. Private equity ownership can sometimes lead to decisions that prioritize investor profits over franchisee health.
Potential Mitigations
- For any franchise, your attorney should research the ownership structure to understand who controls the company and what their objectives might be.
- A business advisor can help investigate the ownership's track record with other businesses, particularly other franchise systems.
- It is important to ask current franchisees if they have noticed any changes in franchisor priorities or support levels due to ownership.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified. The FDD appears to properly disclose the parent company in Item 1. In cases where a franchisor is a thinly capitalized subsidiary, the failure to provide financial statements for a controlling parent company can obscure significant financial risks. Here, the franchisor entity itself presents audited financials.
Potential Mitigations
- Your attorney should always verify the corporate structure of the franchisor and identify any parent or affiliated companies.
- An accountant should determine if the financials of a parent company are required for a complete risk assessment, especially if the parent guarantees the franchisor's performance.
- A business advisor can help investigate the relationship and financial dependency between the franchisor and its parent.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD. Item 1 explicitly states that the franchisor has no predecessors. A franchisor with a predecessor could inherit historical problems, such as litigation or franchisee dissatisfaction, which would be a risk for a new franchisee.
Potential Mitigations
- Your attorney should always carefully review Item 1 of the FDD to check for any mention of predecessors.
- If a predecessor is listed, it is crucial that your attorney and accountant review any associated litigation or bankruptcy history in Items 3 and 4.
- A business advisor can help you conduct independent research on a predecessor's reputation and historical performance.
Pattern of Litigation
High Risk
Explanation
While VTX itself does not have disclosed litigation, its affiliates under the United Franchise Group (UFG) umbrella have a history of regulatory actions. These include consent orders with state regulators for issues like unregistered sales, improper collection of fees, and violations at trade shows. This pattern within the affiliated group could suggest a compliance culture that poses a risk to franchisees across all UFG brands.
Potential Mitigations
- A thorough review of all litigation and regulatory actions involving the franchisor and its affiliates with your attorney is essential.
- Question the franchisor about these past issues and what steps have been taken to improve compliance across the entire organization.
- Your business advisor can help assess if this history indicates a higher risk of future disputes or compliance problems for you.
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