Sample Report
What a ClearFDD Analysis Looks Like
Below is a redacted Tier 1 FDD Risk Scan for a real franchise system. This is what you receive — cited findings, plain-English explanations and actionable next steps.
Franchise Disclosure Document Analysis
[Redacted Franchise] — FDD Analysis Report
Overall Grade
C
Red Flags
3
Yellow Flags
6
Recommendation
Independent Legal Review
Median Revenue
$782K
Est. Payback
18.6 yrs
Executive Summary
[Redacted] is a recognized brand with 50+ years of operation and one of the few automotive franchises that provides Item 19 financial performance data. However, three significant concerns emerge: no exclusive territory protection, a shrinking unit count over three consecutive years, and bottom-quartile economics that are deeply negative.
This franchise can work — top-quartile operators averaged $1.33M in revenue with strong returns. But success is highly location-dependent. Proceed only with rigorous site selection and a full Franchise Agreement review.
Red Flag Summary
Item 12 — No Exclusive Territory
Finding: Franchisor grants no exclusive or protected territory. The franchisor can open a competing unit in your Statistical Area at any time.
Why it matters: Without territorial protection, your revenue is directly at risk from the franchisor's own expansion decisions.
Item 20 — System Shrinking Three Years Running
Finding: Net loss of 44 franchised units over fiscal years 2019–2021. A shrinking system signals franchisee dissatisfaction, poor unit economics, or both.
Item 19 — Bottom Quartile Economics Are Negative
Finding: Bottom quartile averaged $436,945 in revenue. After fees and estimated operating costs, bottom-quartile operators are losing money. Estimated payback at median revenue: 18.6 years.
Breakeven Model — Median Unit
10 Questions to Ask Before Signing
- How many centers currently operate within 10 miles of my proposed location?
- Of the 44 net unit closures, how many were franchisor-initiated vs. voluntary?
- Can you provide data on average franchisee net income — not just gross revenue?
- What happened to the bottom-quartile operators? How many are still open?
- What is the markup on the Center Opening Package vs. open-market pricing?
- What specific criteria do you use to approve a location?
- What are the long-term ownership plans for the brand?
- What happens if I complete training but cannot secure a qualifying location?
- What are the practical costs of arbitration proceedings in Philadelphia?
- Unit count declined every year 2019–2021. What has changed?