Franchisel.com — FDD Diligence Memo
The Tox
Generated 2026-04-06 · 2025 FDD · Government-filed source
The Tox
2025 FDD Diligence Memo
Score of 43/10 driven by: low financial transparency.
Sys Health
7
Fin Strength
2
Contract
4
Red Flags & Key Signals
Auditors raised doubt about the franchisor's ability to continue as a going concern. This is a serious financial red flag — the franchisor may not be able to support the system.
You waive the right to sue in court. Arbitration typically favors the franchisor. Review the venue and arbitrator selection process.
After leaving the franchise, you cannot operate a competing business in this radius. Evaluate the real-world impact on your exit options.
Avg $1,018,409 from government-filed FDD. Transparent disclosure is a positive signal.
Investment Overview
Items 5, 6, 7Total investment range: Not disclosed. Initial fee: $0. Royalty: —. Marketing fund: —.
Item 19 — Revenue
Item 19 — 2025 FDD (government-filed)Item 19 discloses avg revenue of $1,018,409 (Annual).
Sample: WeakThe FDD does not specify how many units were included in this figure.
Item 20 — System Health
Item 20 — 2025 FDDSystem flat — net 0 units in reporting period.
→ StableUnit count essentially unchanged.
Total Units
0
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.
All units included
Revenue figure includes all reporting units — broadest, most conservative sample basis.
Sample size not specified
The FDD does not state how many units contributed to this figure.
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 franchisor's audited financials include a going-concern warning. Ask franchisees: have you heard anything about the franchisor's financial stability? Any changes to support or services recently?
Look for: Signs of reduced headquarters staffing, delayed tech updates, or reduced field support — early indicators of a financially stressed franchisor.
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.
The agreement includes a 2-year, 25-mile post-termination non-compete. Ask franchisees: did you fully understand this when you signed — and do you feel it's fair?
Look for: Whether franchisees feel trapped. High non-compete terms reduce exit flexibility.
Cure period is only 5 days. Ask: have you ever received a default notice? How did the franchisor handle it — were they reasonable?
Look for: A short cure period combined with aggressive enforcement is a serious risk. Look for franchisees who feel supported vs. managed by threat.
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.
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.
Data sources: 2025 Franchise Disclosure Document filed with a state franchise regulator (government record). Source: Extracted from 2025 FDD filed with WI DFI (file #638792). Source: 638792-2025-The-Tox.pdf. · 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.