Franchisel.com — FDD Diligence Memo
FCI
Generated 2026-04-06 · 2025 FDD · Government-filed source
FCI
2025 FDD Diligence Memo
Composite score based on six FDD-derived dimensions.
Sys Health
7
Fin Strength
7
Econ Burden
9
Contract
4
Red Flags & Key Signals
Only 2% of units are represented. Revenue figure may not reflect typical performance.
You waive the right to sue in court. Arbitration typically favors the franchisor. Review the venue and arbitrator selection process.
Franchisor is not obligated to protect your market area. Encroachment from company-owned units or other franchisees is possible.
Item 2 shows multiple executives hired within 2 years of this FDD filing. Leadership instability can affect franchisee support quality during transitions.
Avg $2,367,577 from government-filed FDD. Transparent disclosure is a positive signal.
At least one key executive has disclosed prior franchise system experience — associated with better franchisee support and system discipline.
Franchisor financial statements are audited with no going concern warning.
Investment Overview
Items 5, 6, 7Total investment range: $80,000 – $350,000. Initial fee: $55,000. Royalty: 6%. Marketing fund: 2%.
Payback estimate: Investment-to-disclosed-revenue ratio: 0.09x. This is the ratio of midpoint investment ($215,000) to disclosed avg revenue ($2,367,577). No profit assumptions are applied.
Item 19 — Revenue
Item 19 — 2025 FDD (government-filed)Item 19 discloses avg revenue of $2,367,577 (FY 2025).
Sample: WeakOnly 1 units (2% of system) — small sample. Average may not reflect typical unit performance. Investment-to-disclosed-revenue ratio: 0.09x ($215,000 midpoint investment vs $2,367,577 avg revenue).
Item 20 — System Health
Item 20 — 2025 FDDSystem flat — net 0 units in reporting period.
→ StableUnit count essentially unchanged.
Total Units
50
Net Growth
+0
Turnover
0%
Year-over-Year Trends
2025 FDDOpened
+0
Closed
-0
Net
+0
Prior-year Item 19 revenue data not available. Unit data above covers the reporting period in the 2025 FDD.
Key Contract Terms
Item 17Item 19 Data Quality Flags
Item 19Revenue type unclear
The FDD does not clearly specify whether figures are gross sales, net sales, or a profit metric. This limits comparability.
Profit not disclosed
Item 19 reports revenue only. No expense breakdown is provided. Profit cannot be determined from this disclosure alone.
Subset of units reported
Item 19 samples may be limited to defined subsets (subset meeting stated criteria), which affects comparability.
Small sample (1 of 50 units)
Only 2% of eligible units are represented. Average may not reflect typical unit performance.
Current data (2025)
Revenue figures are from 2025 — recent and relevant.
Franchisee Interview Questions
Item 20 contactsUse Item 20 to get current franchisee contact info. Call at least 3-5. Ask these questions:
The agreement requires mandatory arbitration. Ask: have you ever had a dispute with the franchisor — how was it handled? Did you feel you had recourse?
Look for: Franchisees who've been through disputes. Understand if the arbitration process felt fair or heavily stacked toward the franchisor.
How responsive is your franchisor rep — do they actually help when you have a problem, or are they just checking boxes?
Look for: Specific stories (not just vague positives). Ask about a time they needed help urgently — response time matters.
If you decided to sell your franchise tomorrow, how easy would that be? Has the franchisor ever blocked or delayed a transfer you wanted?
Look for: Transfer fee surprises, right-of-first-refusal complications, or franchisor demanding upgrades before approving a sale.
Item 2 shows recent leadership changes. Ask current franchisees: has the change in leadership affected support quality, speed of decisions, or the culture of the system?
Look for: Whether the new leadership has franchise operations experience. Disruption in field support after leadership transitions is common.
What did your revenue look like in year 1 vs. year 2 vs. now? When did you reach breakeven?
Look for: Year 1 revenue is typically well below Item 19 averages (which often exclude ramp-up units). Expect 12-24 months to reach average.
What did the training actually cover vs. what you needed on day 1? What do you wish you'd learned before opening?
Look for: Gap between training content and operational reality. New franchisees often report the training covered theory but not real-world situations.
Management Team — Item 2 (Business Experience)
Leadership has prior franchise system experience; long-tenured executives (5+ years); recent leadership changes detected; 6 senior roles identified.
Item 2 · 2025 FDD · confidence: medium
Territory — Item 12
NO exclusive territory — encroachment risk exists; franchisor reserves online/ecommerce sales; territory contingent on performance requirements.
Item 12 · 2025 FDD
Data sources: 2025 Franchise Disclosure Document filed with a state franchise regulator (government record). Source: Extracted from 2025 FDD filed with MN CARDS (file #10729). Data verified from government filing.. · Payback estimates and margin assumptions are editorial — not from the FDD. This memo does not constitute legal or financial advice. Consult a franchise attorney and accountant before signing. Generated 2026-04-06 by Franchisel.com.