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X Golf
How much does X Golf cost?
Initial Investment Range
$1,132,630 to $1,749,800
Franchise Fee
$447,850 to $578,850
As an X-Golf franchisee, you will operate an indoor golf entertainment facility serving food and beverages in a fun and upbeat atmosphere.
Enjoy our partial free risk analysis below
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X Golf April 21, 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
Medium Risk
Explanation
The audited financial statements for X GOLF Franchise Corporation (XGFC) show profitability and positive net worth. However, a large dividend of $4.5 million was paid to the parent company in 2024, significantly reducing cash. Furthermore, a large and growing asset is a $2.7 million receivable from the parent company. This represents a risk because your franchisor's financial health is intertwined with the parent's ability to repay this amount, which is not documented with its own financials.
Potential Mitigations
- An experienced franchise accountant should review the consolidated financial health, including the significance of the dividend payment and the large inter-company receivable.
- Discuss the franchisor's capitalization strategy and use of funds with your financial advisor, particularly regarding cash distributions to the parent company.
- Your attorney can help you ask the franchisor for more details about the financial stability of the parent entity.
High Franchisee Turnover
High Risk
Explanation
Item 20 tables report zero terminations, non-renewals, or cessations for other reasons over the past three years, which seems unusually low for a fast-growing system of over 100 units. This contrasts sharply with the serious litigation disclosed in Item 3, which details significant internal conflict and franchisee disputes in Michigan. This discrepancy suggests the Item 20 data may not fully reflect franchisee distress, which could be masked in categories like transfers or reacquisitions.
Potential Mitigations
- A franchise attorney should be consulted to understand the full implications of the litigation disclosed in Item 3.
- Contacting a significant number of current and former franchisees from the list in Exhibit H is critical to understanding the real-world operational climate.
- With your accountant, analyze the Item 20 data carefully, questioning the franchisor about the suspiciously low turnover numbers in light of the litigation.
Rapid System Growth
High Risk
Explanation
The franchise system has grown exceptionally fast, expanding from 43 to 124 total outlets in just two years. Such rapid growth can strain a franchisor's resources, potentially leading to challenges in providing the promised level of training, site selection assistance, and ongoing operational support to all franchisees. The Operating Manual's table of contents in Exhibit G suggests the manual is quite short (19 pages), which may indicate underdeveloped systems for a network of this size.
Potential Mitigations
- Engaging a business advisor to help you question the franchisor about their specific plans for scaling support infrastructure is a prudent step.
- It is essential to speak with a broad range of franchisees, both new and established, to gauge the current quality and responsiveness of franchisor support.
- Your attorney can help you seek clearer, more enforceable support commitments in the Franchise Agreement.
New/Unproven Franchise System
Low Risk
Explanation
This risk was not identified. The franchisor has been operating since 2015 and has a substantial number of active franchises. While experiencing rapid growth, it is not a new or unproven startup. An unproven system can carry higher risks due to the lack of a track record for franchisee success, underdeveloped support systems, and minimal brand recognition. Careful due diligence is always required, but the brand has been franchising for several years.
Potential Mitigations
- A discussion with your business advisor about the franchisor's history and stage of development can provide valuable context.
- Verifying the franchisor's operating history by speaking with the earliest franchisees on the list in Exhibit H is a recommended step.
- An accountant can help assess whether the franchisor's financial track record demonstrates a sustainable and mature business model.
Possible Fad Business
Medium Risk
Explanation
The indoor golf and entertainment-bar concept is a modern and growing industry but may be subject to changing consumer trends and discretionary spending habits. While it has established demand, its long-term resilience through various economic cycles is not as proven as more traditional industries. You could face challenges if consumer interest in this specific form of entertainment wanes over the 10-year contract term, a risk that should be carefully considered.
Potential Mitigations
- Your business advisor can assist you in conducting independent market research to assess the long-term sustainability of the indoor golf entertainment niche.
- Question the franchisor about their long-term plans for innovation and adaptation to keep the brand relevant and competitive.
- Speaking with franchisees in various markets about local demand and repeat business can provide important insights.
Inexperienced Management
Medium Risk
Explanation
Item 2 shows that some executives have direct experience as X-Golf franchisees. However, Item 3 discloses severe internal litigation involving top management, including the current Co-CEO who was previously a plaintiff in a derivative suit against the company. This history of significant internal conflict, with allegations of siphoning funds, suggests a level of turmoil and distraction at the leadership level that could impact their ability to effectively manage and support the franchise system.
Potential Mitigations
- A frank discussion with your attorney is needed to evaluate the risks posed by the disclosed management conflicts.
- It's crucial to ask current franchisees about the stability of the management team and the quality of leadership and direction they provide.
- Your business advisor can help you assess how such internal disputes might affect the franchisor's operational effectiveness and support.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified. Item 1 of the FDD does not indicate that the franchisor is owned or controlled by a private equity firm. Private equity ownership can sometimes introduce a focus on short-term returns over the long-term health of the franchise system, potentially leading to increased fees, reduced support, or a quick sale of the company. The absence of this ownership structure may suggest a different set of strategic priorities for the franchisor.
Potential Mitigations
- Your attorney can help you verify the ownership structure of the franchisor and its parent company through public records.
- A business advisor can help you understand the different implications of various ownership structures on a franchise system's strategy.
- Inquiring with long-term franchisees about the stability and philosophy of the ownership is always a valuable due diligence step.
Non-Disclosure of Parent Company
Medium Risk
Explanation
The FDD discloses the parent company, X GOLF America, Inc. (XGA). However, the parent company's financial statements are not provided. The franchisor's balance sheet shows a very large receivable of $2.7 million due from this parent company. This means a significant portion of the franchisor's assets depends on the financial health and ability of the parent company to pay its debt, creating a risk for which you have no direct financial disclosure to evaluate.
Potential Mitigations
- Having an accountant analyze the franchisor's balance sheet, paying special attention to the large inter-company receivable, is essential.
- Your attorney should advise on the potential risks of the parent's financial performance when it is a significant debtor to the franchisor.
- You should ask the franchisor for information regarding the financial stability of its parent company, XGA.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified. The FDD does not disclose any predecessors in Item 1. A predecessor is a company from which the franchisor acquired the main assets of the business. If a predecessor existed, their history, including any past litigation or bankruptcies, would be important for understanding the full background of the franchise system. The lack of a disclosed predecessor means the current franchisor is the original developer of the system.
Potential Mitigations
- Your attorney can confirm the absence of any disclosed predecessors in the FDD.
- Asking long-term franchisees about the history of the company can help verify the information provided in the FDD.
- Independent research on the company's history, assisted by a business advisor, can provide additional comfort.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses significant and concerning litigation. This includes a concluded derivative lawsuit and a pending case in Michigan involving disputes between the franchisor's own principals. Allegations include siphoning of revenues, usurping corporate opportunities, and violations of franchise law. This signals severe internal conflict at the highest level of management, which could create instability and divert focus and resources away from supporting franchisees. This is a very serious red flag.
Potential Mitigations
- A thorough review of the litigation summary in Item 3 with your franchise attorney is absolutely critical.
- It is imperative to ask the franchisor direct questions about this litigation and how it impacts the company's stability and franchisee support.
- Speaking with franchisees, particularly those in Michigan, is essential to understand the real-world impact of these disputes.
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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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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