YorCMO
Initial Investment Range
$13,682 to $117,321
Franchise Fee
$7,500 to $97,000
The franchise that we offer is for yorCMO, a fractional marketing service that provides businesses with the opportunity to engage a shared chief marketing officer (CMO) to develop and implement marketing strategies for their businesses and, other services and products.
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YorCMO April 18, 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
High Risk
Explanation
The franchisor, yorCMO Franchising, LLC (yorCMO), is in a precarious financial state. The 2024 audited financials show a members' deficit (negative net worth) of over $535,000 and a net loss of over $77,000, continuing a pattern of unprofitability. Its current liabilities vastly exceed its current assets. This situation, flagged as a “Financial Condition” risk by the franchisor itself, raises serious questions about its long-term viability and ability to support you.
Potential Mitigations
- A franchise accountant must conduct a thorough analysis of the audited financial statements, including all footnotes, to assess the franchisor's solvency and sustainability.
- Discussing the company's significant members' deficit and plans for achieving profitability with your financial advisor is essential.
- Your attorney should review any state-mandated financial assurances, like bonds or escrow requirements, that might offer you limited protection.
High Franchisee Turnover
Medium Risk
Explanation
Item 20 data for 2024 shows that two franchisees left the system (one termination, one ceased operations) from a starting base of 25. While this 8% annual churn rate is not extreme, it is a notable figure for a young and growing system. This turnover could indicate potential issues with the business model's profitability, the franchisor's support, or franchisee satisfaction, especially when considered alongside the company's weak financial position.
Potential Mitigations
- It is critical to contact former franchisees listed in Exhibit G to understand their specific reasons for leaving the system; your business advisor can help prepare questions.
- Analyzing the turnover rate in the context of the franchisor's overall financial health with your accountant is imperative for a complete risk picture.
- Your attorney can help you ask the franchisor for more details about the circumstances surrounding these departures.
Rapid System Growth
Medium Risk
Explanation
The franchise system has more than doubled in size over the last two years, growing from 14 to 29 outlets. This rapid expansion, when viewed alongside the franchisor's significant negative net worth and ongoing operating losses as shown in Item 21, creates a risk. The company's financial strain may limit its ability to scale its support, training, and operational infrastructure fast enough to adequately serve the growing number of franchisees.
Potential Mitigations
- Questioning the franchisor's management about their specific plans and capital allocation for scaling support systems is a key step your business advisor can assist with.
- A review of the franchisor's staffing and infrastructure in relation to the number of franchisees with your business advisor can provide valuable insights.
- In discussions with current franchisees, you should inquire specifically about the quality and timeliness of support as the system has grown.
New/Unproven Franchise System
High Risk
Explanation
The franchisor began operations in late 2020 and started franchising in 2021, making it a very new and unproven system. This is explicitly disclosed as a “Short Operating History” risk. This early stage means the business model's long-term sustainability is not yet established, and its support systems may be underdeveloped. Combined with the company's poor financial condition and past regulatory issues, this represents a significantly higher level of investment risk.
Potential Mitigations
- A thorough investigation into the founders' specific experience in both the marketing industry and in successfully managing a franchise system should be conducted with a business advisor.
- Your accountant must perform a deep dive on the franchisor's capitalization to assess if it has sufficient funds to survive the startup phase.
- Given the higher risk, your attorney might be able to negotiate more franchisee-favorable terms, such as lower initial fees or enhanced support obligations.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. The business of providing fractional marketing services to other businesses is a recognized professional service model, not a concept based on a fleeting trend or novelty. However, a franchisee should always consider the long-term demand for any specialized service in their local market.
Potential Mitigations
- Engaging a business advisor to research the long-term demand for fractional marketing services in your target market can help validate the business model's sustainability.
- An analysis of the competitive landscape and how the yorCMO model is differentiated should be conducted with your business advisor.
- You should ask the franchisor about their plans for innovation and service evolution to stay relevant in the changing marketing industry.
Inexperienced Management
Medium Risk
Explanation
While the co-founder has industry experience since 2017 through an affiliate, the franchising entity is very young. The management team's limited experience in operating a franchise system is a notable risk, underscored by the regulatory action in Virginia for improper franchise sales and disclosure violations. This past compliance failure suggests a learning curve in managing the legal complexities of franchising, which could affect you.
Potential Mitigations
- A direct conversation with the franchisor's management team about the lessons learned from the Virginia regulatory action is important.
- Your business advisor can help you assess whether the management team has since implemented robust franchise compliance and support systems.
- Speaking with the earliest franchisees about their experience with management's support and guidance is a crucial due diligence step.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 and Item 2 do not indicate that the franchisor is owned or controlled by a private equity firm. Ownership appears to rest with the founding individuals. Therefore, risks specifically associated with PE fund timelines and priorities are not present here.
Potential Mitigations
- It is always prudent to have your attorney verify the ownership structure detailed in Item 1 to confirm who controls the franchisor.
- Should the franchisor be sold in the future, your attorney should review the assignment clauses in the Franchise Agreement to understand your rights.
- A business advisor can help you understand the potential impact of different ownership structures on a franchise system.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 appears to properly disclose the franchisor's affiliate companies. There is no indication of a controlling parent company whose financials or identity are being withheld. The financial statements provided are for the franchising entity itself.
Potential Mitigations
- Your attorney should always confirm the legal name and structure of the franchising entity and its relationship to any affiliates mentioned in Item 1.
- If an affiliate provides a guaranty or is a critical supplier, an accountant should review their financial information if available.
- It's good practice to ask a business advisor to help you map out the corporate structure to understand all related entities.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 of the FDD clearly states, “We do not have any predecessors.” Therefore, there are no risks associated with a hidden or problematic history from a prior company that owned the system.
Potential Mitigations
- Your attorney should verify the franchisor's corporate history to confirm the 'no predecessors' statement.
- While there is no predecessor, discussing the operating history of the affiliate, yorCMO, LLC, with a business advisor is still a valuable step.
- Questions should be directed to the franchisor about how the affiliate's operating model was adapted for the franchise system.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses two significant legal events: a lawsuit against the co-founder alleging fraud that was settled, and a state regulatory action by Virginia for illegal franchise sales. An enforcement action against a new franchisor for violating franchise law is a major red flag. This history suggests potential compliance weaknesses and creates a higher-risk environment for prospective franchisees, establishing a pattern of significant legal issues early in the company's life.
Potential Mitigations
- Your franchise attorney must carefully analyze the details and implications of the Virginia regulatory action and the settled fraud lawsuit.
- It's crucial to ask the franchisor what specific changes to their compliance and sales processes were made as a result of these events.
- A business advisor can help you weigh the seriousness of this litigation history against the potential rewards of the franchise.
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.
