Zoom Drain
Initial Investment Range
$259,618 to $621,461
Franchise Fee
$88,125 to $195,900
As a franchisee, you will operate a business that provides drain cleaning and sewer inspections, maintenance, repair, and replacement work as well as drain pumping, grease trap and septic services for residential and commercial customers.
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Zoom Drain April 29, 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
Audited financials in Item 21 show profitability. However, about 28% of 2024 revenue came from initial franchise and equipment fees, not ongoing royalties, which may indicate a reliance on franchise sales for income. Furthermore, the Maryland state addendum discloses that a financial assurance was required due to the franchisor's financial condition. This could suggest underlying financial risks not immediately apparent from the main statements, potentially affecting the franchisor's ability to provide long-term support.
Potential Mitigations
- An experienced franchise accountant should analyze the financial statements, focusing on the mix of revenue sources and cash flow trends.
- Discuss the Maryland financial assurance requirement with your attorney to understand its implications and the specific financial concerns the state may have had.
- Inquire with the franchisor about their strategy for shifting revenue reliance towards sustainable, long-term royalty streams with help from your business advisor.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a significant number of outlets leaving the system, with a churn rate of approximately 17.5% in 2024, a strong indicator of potential systemic problems. This high turnover could reflect franchisee unprofitability or dissatisfaction. Compounding this, Exhibit D states that some former franchisees signed provisions restricting their ability to speak openly, which may severely hinder your due diligence and suggests underlying issues could be greater than the numbers indicate.
Potential Mitigations
- It is critical to contact a significant number of current and especially former franchisees from the list in Exhibit D to discuss their experiences.
- Your franchise attorney can help you frame specific questions about profitability, support, and the reasons for the high turnover rate.
- A thorough review of the turnover data with your accountant is necessary to understand the negative trends over the past three years.
Rapid System Growth
High Risk
Explanation
The franchise system has experienced explosive growth, expanding from 17 to 161 franchised territories in just three years, as shown in Item 20. Such rapid expansion can strain a franchisor's ability to provide adequate and timely training, site selection assistance, and ongoing operational support to all franchisees. You may find that the support infrastructure has not kept pace with the growth in the number of outlets, potentially affecting your business's ramp-up and performance.
Potential Mitigations
- Engaging a business advisor to question the franchisor about their specific plans to scale support infrastructure is crucial.
- Interviewing a broad range of existing franchisees, both new and established, is necessary to assess the current quality and responsiveness of franchisor support.
- Your attorney should help clarify the specific support commitments outlined in the Franchise Agreement.
New or Unproven Franchise System
Medium Risk
Explanation
The franchisor explicitly discloses a 'Short Operating History' as a special risk. The predecessor began franchising in 2014 and the current entity took over in 2021. While not a brand-new startup, this limited history means the business model and support systems may still be evolving. This increases the risk of unforeseen challenges, potential system-wide failures, and an unproven long-term track record compared to more established franchise systems, making your investment potentially more speculative.
Potential Mitigations
- Conduct extensive due diligence on the management team's prior industry and franchising experience with your business advisor.
- Speaking with the earliest franchisees listed in Item 20 is important to understand how the system and support have evolved.
- An accountant can help you assess the franchisor's capitalization and financial stability to weather challenges common to younger systems.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. A 'fad' business is one tied to a short-lived trend, which can create long-term risk for a franchisee locked into a 10-year agreement. A prospective franchisee should evaluate if a concept has sustainable, long-term consumer demand or if its appeal is likely to diminish as trends change, potentially leaving them with a failing business even if their contract remains in force.
Potential Mitigations
- Assess the long-term market demand for the product or service independently with your business advisor.
- It is wise to evaluate the franchisor's plans for innovation, adaptation, and staying relevant as disclosed in Item 11.
- Consider the sustainability of the business model beyond current trends and its resilience to economic downturns with your financial advisor.
Inexperienced Management
Medium Risk
Explanation
Item 2 indicates that the key executives have extensive experience in the industry, with the original founder still involved. However, the current franchisor entity was formed in 2021 under a new parent company structure involving a private equity firm. While management seems experienced, the relatively new corporate structure and ownership could present risks related to shifts in strategy or support philosophy that differ from the operational history of the brand's founder.
Potential Mitigations
- A business advisor can help you vet the management team's background and specific experience in managing a franchise system of this size and complexity.
- It is important to speak with franchisees who have been with the system both before and after the 2021 ownership change to understand any differences in support.
- Your attorney can help you understand the implications of the private equity ownership structure on long-term strategy.
Private Equity Ownership
Medium Risk
Explanation
Item 1 discloses that the franchisor is part of a larger structure managed by MPK Equity Partners, LLC, a private equity firm. This ownership structure can introduce risks, as decisions may prioritize short-term investor returns over the long-term health of franchisees. This could manifest as pressure to cut support costs, increase fees, or focus on rapid franchise sales. The Franchise Agreement also permits the franchisor to sell the entire system, potentially to another owner with different priorities.
Potential Mitigations
- Researching the private equity firm's track record with other franchise brands they own or have owned can be illuminating; your business advisor can assist.
- It is important to talk to franchisees about any changes in support, fees, or system direction since the acquisition.
- Have your attorney assess the franchisor's right to assign the agreement and the potential implications if the system is sold.
Non-Disclosure of Parent Company
Low Risk
Explanation
This specific risk was not identified. In some cases, a franchisor might be a thinly capitalized subsidiary of a larger, undisclosed parent company. If the parent is not disclosed and its financials are not provided, a prospective franchisee cannot assess the true financial strength and backing of the system. This can hide significant risks, as the franchisor entity itself may not have the resources to meet its support obligations without the parent's backing.
Potential Mitigations
- Your attorney should verify the corporate structure, especially if the franchisor entity is newly formed or appears thinly capitalized.
- An accountant should review the provided financials for any notes on parent guarantees or inter-company dependencies.
- If a parent entity is critical to the system's viability, a business advisor can help you assess the risks if its financials are not disclosed.
Predecessor History Issues
Low Risk
Explanation
Item 1 discloses that Zoom Franchise Company, LLC is the predecessor to the current franchisor. The FDD appears to properly disclose the predecessor's history, and there are no significant negative issues like bankruptcy or major litigation directly attributed to the predecessor that would raise alarms. The continuity of key personnel from the predecessor to the current entity is also noted, suggesting a consistent operational lineage rather than an attempt to escape a troubled past.
Potential Mitigations
- Your attorney can confirm that the predecessor disclosures in Items 1, 3, and 4 meet all legal requirements.
- It is still prudent to ask long-term franchisees about their experiences under the predecessor entity to ensure a complete picture.
- A business advisor can help you research the predecessor's public track record, if any, to verify the information provided.
Pattern of Litigation
Low Risk
Explanation
Item 3 discloses litigation involving an affiliated company, Restoration 1, which settled with Virginia over selling franchises with a lapsed registration. While not involving Zoom Drain LLC directly, a compliance failure within the parent company's broader system could suggest potential risks in overall corporate governance or compliance oversight. However, there is no pattern of litigation against the franchisor itself alleging fraud, misrepresentation, or other systemic issues, which is a positive factor.
Potential Mitigations
- Your attorney should review the details of the affiliate's litigation to assess its relevance to the franchisor's own operations and compliance culture.
- Inquiring with the franchisor about the compliance controls they have in place to prevent similar issues can provide valuable insight.
- A business advisor can help you research public records for any other litigation involving the franchisor or its key principals.
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
Unlock Full Risk Analysis
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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
Unlock Full Risk Analysis
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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
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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