Atwork
Professional Services
Founded 199290 locationsCompany Profile
Year Founded:1992
Atwork Franchise Cost
| Franchise Fee: | $40,000Key Metric |
| Total Investment: | $156,000 - $213,000Key Metric |
| Liquid Capital: | $35,000 |
| Royalty Fee: | 8% of gross sales |
| Marketing Fee: | 1% of gross sales |
Quick ROI Calculator
Based on Atwork's actual financial data
Outlet Counts by Year
Historical outlet data extracted from FDD documents
Total US Locations:90
Scale relative to 1,000 locations
Franchised Units:84
Corporate Units:6
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AI-Powered Due Diligence Analysis
Our advanced AI analyzes Franchise Disclosure Documents (FDDs) to identify potential risks and opportunities across 10 critical categories.
11
High Risk
Critical items
23% of total
26
Medium Risk
Monitor closely
55% of total
10
Low Risk
Manageable items
21% of total
47
Total Items
Factors analyzed
10 categories
5.11
Overall Score
Low RiskHigh Risk
010
Franchisor Stability Risks
5 risks identified
1
3
1
Limited Operating History with Current Business Model
Medium
Explanation:
- While AtWork was incorporated in 1992, they have shifted their business model over time. They only began offering the current franchise model in 2011.
- This relatively short history with the current model presents a risk as there is less established data on performance and long-term viability compared to more mature franchise systems.
Potential Mitigations:
- Thoroughly research the performance of existing franchisees under the current model (since 2011). Request contact information for franchisees who have been operating for a longer period and inquire about their experiences.
- Analyze the franchisor's rationale for previous model changes and assess the stability of the current model given past shifts.
- Consult with a franchise attorney and financial advisor to evaluate the risks and potential returns associated with a relatively new franchise model.
FDD Citations:
- Item 1: "From 1992 through 2002 we offered only AtWork Personnel Services franchises, and from 2003 through 2011 we offered franchises limited to other specific secondary businesses...These franchises may be operated under different terms than our current offering."
- Item 1: "GC Hall has operated businesses of the type being offered in this disclosure document since December 2011."
Franchisor Lacks Direct Operating Experience
High
Explanation:
- AtWork Franchise, Inc. itself does not operate any units of the franchised business. Their affiliate, G.C. Hall, LLC, operates company-owned outlets.
- This lack of direct operational experience by the franchisor raises concerns about their ability to provide effective support and guidance to franchisees. They may have less practical understanding of the day-to-day challenges and market realities faced by franchisees.
Potential Mitigations:
- Carefully evaluate the experience and expertise of the management team at both AtWork and G.C. Hall. Inquire about their relevant industry experience and their understanding of the business model.
- Speak with existing franchisees about the quality and practicality of the support they receive from the franchisor. Ask specific questions about training, marketing, and operational assistance.
- Assess the track record of G.C. Hall's company-owned outlets. This can provide some insight into the viability of the business model and the franchisor's operational capabilities.
FDD Citations:
- Item 1: "We do not operate businesses of the type being offered in this disclosure document."
- Item 1: "As of December 31, 2023, our affiliate, G.C. Hall, LLC (“GC Hall”) operated 4 company-owned outlets."
Dependence on Affiliate for Operational Expertise
Medium
Explanation:
- The franchisor relies on its affiliate, G.C. Hall, for practical experience in operating the business model. This dependence creates a potential risk if the relationship between the franchisor and G.C. Hall deteriorates or if G.C. Hall experiences financial difficulties.
- The success of the franchise system is indirectly tied to the performance and stability of a separate entity, which introduces an additional layer of risk for franchisees.
Potential Mitigations:
- Investigate the legal and financial relationship between AtWork and G.C. Hall. Understand the terms of any agreements between them and assess the potential impact on franchisees if the relationship changes.
- Evaluate the financial stability of G.C. Hall. Review their financial statements and assess their long-term viability.
- Inquire about the franchisor's contingency plans if the relationship with G.C. Hall were to be disrupted.
FDD Citations:
- Item 1: "As of December 31, 2023, our affiliate, G.C. Hall, LLC (“GC Hall”) operated 4 company-owned outlets."
- Item 1: "GC Hall has operated businesses of the type being offered in this disclosure document since December 2011."
Small Number of Company-Owned Units
Low
Explanation:
- With only 4 company-owned units operated by G.C. Hall, the franchisor's ability to test new initiatives, refine operational procedures, and demonstrate profitability on a larger scale is limited. This can impact the level of support and innovation provided to franchisees.
Potential Mitigations:
- Inquire about the franchisor's plans for expanding the number of company-owned units. A commitment to expanding their own operations can demonstrate confidence in the business model and provide a better testing ground for new strategies.
- Assess the performance of the existing company-owned units. While limited in number, their financial results can still offer some insights into the potential of the business.
FDD Citations:
- Item 1: "As of December 31, 2023, our affiliate, G.C. Hall, LLC (“GC Hall”) operated 4 company-owned outlets."
- Item 20 (as referenced in the provided text): Confirms the existence of company-owned units.
Franchisee Turnover and Closures
Medium
Explanation:
- Item 20 details terminations, non-renewals, reacquisitions, and cessations of operations. While the specific numbers are not fully provided in the excerpt, the presence of these events indicates some level of franchisee turnover and potential business failures.
- Understanding the reasons behind these events is crucial for assessing the long-term viability and stability of the franchise system.
Potential Mitigations:
- Request the complete Item 20 table from the franchisor to analyze the full extent of franchisee turnover and closures over the past three years.
- Contact existing and former franchisees to understand the reasons behind terminations, non-renewals, and closures. This can provide valuable insights into potential challenges and risks associated with the franchise.
- Analyze the franchisor's support systems and resources to assess their effectiveness in helping franchisees succeed and avoid closure.
FDD Citations:
- Item 20: "Table No. 3 Status of Franchised Outlets For Years 2021, 2022, 2023" - This table contains data on terminations, non-renewals, and other reasons for ceasing operations.
Disclosure & Representation Risks
6 risks identified
2
3
1
Financial Performance Dependence on Staffing Industry
High
Explanation:
- AtWork's business model heavily relies on the staffing industry. Fluctuations in the economy, particularly those impacting employment rates and demand for staffing services, could significantly affect franchisee revenue and profitability.
- Item 2 highlights AtWork's focus on staffing services, while Item 7 and the financial statements (Exhibit A) don't provide sufficient detail on performance during economic downturns or diversification strategies.
Potential Mitigations:
- Carefully analyze market trends and economic forecasts in your target territory.
- Develop a robust business plan that accounts for potential economic downturns and includes strategies to diversify service offerings or target different client segments.
- Discuss with existing franchisees their experiences during periods of economic instability and their strategies for mitigating risks.
FDD Citations:
- Item 2: Description of Business
- Item 7: Estimated Initial Investment
- Exhibit A: Financial Statements
Limited Operating History with Current Business Model
Medium
Explanation:
- While AtWork was founded in 1992, the FDD doesn't clearly articulate how long the current franchise model has been in operation. A shorter history with the current model increases the risk of unforeseen challenges and a lack of established best practices for franchisees.
Potential Mitigations:
- Request clarification from the franchisor regarding the history of the current franchise model, including the number of years it has been operating, the number of franchisees that have joined and left the system, and the reasons for any departures.
- Speak with existing franchisees to understand their experiences and challenges with the current model.
FDD Citations:
- Item 2: Description of Business
Reliance on Franchisor's Technology and Systems
Medium
Explanation:
- Franchisees are dependent on the franchisor's proprietary technology and systems, which may include software, platforms, and other tools. Any disruptions or issues with these systems, such as outages, security breaches, or lack of updates, could significantly impact franchisee operations.
Potential Mitigations:
- Thoroughly review the franchisor's technology agreements and understand the terms and conditions, including service level agreements (SLAs), disaster recovery plans, and security measures.
- Inquire about the franchisor's plans for system upgrades and maintenance.
- Speak with existing franchisees about their experiences with the franchisor's technology and systems.
FDD Citations:
- Item 8: Fees
- Item 11: Franchisor's Obligations
Competition in the Staffing Industry
Medium
Explanation:
- The staffing industry is highly competitive, with both established national players and smaller local agencies. Franchisees will face competition for clients and candidates, which could impact their ability to grow their business.
Potential Mitigations:
- Conduct thorough market research to understand the competitive landscape in your target territory.
- Develop a strong marketing and sales strategy to differentiate your business from competitors.
- Focus on building strong relationships with clients and candidates.
FDD Citations:
- Item 2: Description of Business
- Item 12: Territory
Potential Misrepresentation of Financial Performance
High
Explanation:
- Item 19, if present, would contain financial performance representations (FPRs). There is an inherent risk that these representations may not accurately reflect the potential financial results of a franchisee. Overreliance on FPRs without conducting independent due diligence could lead to unrealistic expectations and financial difficulties.
Potential Mitigations:
- Carefully review Item 19 (if available) and understand the basis for any financial performance representations.
- Consult with a financial advisor to assess the reasonableness of the FPRs and develop realistic financial projections.
- Speak with existing franchisees to compare their actual financial results to the FPRs.
- Verify the information presented in Item 19 with independent market research and industry data.
FDD Citations:
- Item 19: Financial Performance Representations (if applicable)
Lack of Clarity on Franchisor's Financial Health
Low
Explanation:
- While the FDD includes audited financial statements, the provided excerpt doesn't offer a complete picture of the franchisor's long-term financial stability. A franchisor facing financial difficulties could negatively impact its ability to support franchisees.
Potential Mitigations:
- Review the complete financial statements in Exhibit A thoroughly, including the notes, to assess the franchisor's financial health.
- Consult with a financial advisor to analyze the franchisor's financial position and identify any potential red flags.
FDD Citations:
- Exhibit A: Financial Statements
Financial & Fee Risks
3 risks identified
1
2
Non-Refundable Initial Franchise Fee
High
Explanation:
- The initial franchise fee of $40,000 is non-refundable, representing a significant sunk cost if the franchise relationship terminates prematurely or is unsuccessful.
- This lack of refund creates a substantial financial risk for the franchisee, especially considering the overall investment range of $156,000 - $213,000.
Potential Mitigations:
- Thoroughly review the FDD and Franchise Agreement to understand the circumstances under which the fee might be partially refundable.
- Conduct extensive due diligence on AtWork, including speaking with existing and former franchisees, to assess the likelihood of success and potential challenges.
- Secure legal counsel specializing in franchising to review the agreement and advise on potential risks and protections.
FDD Citations:
- Item 7, Notes (1): "Amounts payable to us are non-refundable, unless otherwise indicated."
Variable and Potentially High Initial Investment
Medium
Explanation:
- The estimated initial investment ranges from $153,500 to $210,500, a significant difference that could impact financing and profitability.
- Several cost categories have broad ranges (e.g., Lease/Rent and Deposit, Leasehold Improvements, Additional Funds), making it difficult to accurately budget and predict startup expenses.
Potential Mitigations:
- Carefully analyze the high and low ends of each cost category to understand the potential variability and develop realistic best-case and worst-case scenarios.
- Obtain detailed quotes from vendors and suppliers for key expenses to refine the estimated investment and minimize unexpected costs.
- Secure financing that can accommodate the higher end of the investment range to avoid cash flow issues during startup.
FDD Citations:
- Item 7: Entire table of estimated initial investment.
Additional Funds Requirement (6-9 Months)
Medium
Explanation:
- The requirement for $66,000 - $102,500 in additional funds for 6-9 months of operation represents a substantial financial burden and potential risk if revenue targets are not met.
- This large range makes it challenging to accurately plan for ongoing expenses and could lead to financial strain if the business takes longer than expected to become profitable.
Potential Mitigations:
- Develop a detailed financial projection for the first year of operation, including realistic revenue and expense forecasts.
- Secure sufficient working capital or a line of credit to cover the higher end of the additional funds requirement.
- Explore strategies to minimize ongoing expenses and accelerate revenue generation during the initial months of operation.
FDD Citations:
- Item 7: "Additional Funds – 6 to 9 months: $66,000 - $102,500."
Legal & Contract Risks
3 risks identified
2
1
Washington State Franchise Investment Protection Act Superseding Franchise Agreement
Medium
Explanation:
- The Washington Franchise Investment Protection Act (WFIPA) may supersede the Franchise Agreement, particularly regarding termination and renewal. This creates uncertainty about the enforceability of certain contract provisions.
- Court decisions interpreting the WFIPA could further impact the franchise relationship, adding complexity and potential deviations from the original agreement.
Potential Mitigations:
- Carefully review the WFIPA and consult with an attorney specializing in Washington franchise law to understand its implications for the franchise agreement.
- Negotiate specific provisions in the Franchise Agreement to address potential conflicts with the WFIPA, seeking clarity and predictability.
- Stay informed about relevant court decisions interpreting the WFIPA and their potential impact on the franchise relationship.
FDD Citations:
- Item 17, Washington Addendum: "RCW 19.100.180 may supersede the Franchise Agreement...including the areas of termination and renewal..."
- Item 17, Washington Addendum: "There may also be court decisions which may supersede the Franchise Agreement..."
Washington State Restrictions on Non-Compete and Employee Solicitation
Medium
Explanation:
- Washington law significantly restricts the enforceability of non-compete agreements for employees and independent contractors, limiting the franchisor's ability to protect its business interests.
- The franchisor is prohibited from restricting a franchisee from soliciting or hiring employees of the franchisor or other franchisees, potentially increasing competition and employee turnover.
Potential Mitigations:
- Understand the specific income thresholds for enforcing non-compete agreements in Washington and structure compensation accordingly.
- Develop alternative strategies for protecting confidential information and trade secrets, such as robust non-disclosure agreements.
- Focus on creating a positive work environment and competitive compensation packages to retain employees.
FDD Citations:
- Item 17, Washington Addendum: "Pursuant to RCW 49.62.020, a noncompetition covenant is void..."
- Item 17, Washington Addendum: "RCW 49.62.060 prohibits a franchisor from restricting...soliciting or hiring any employee..."
Waiver of Rights Limitations (Washington)
Low
Explanation:
- Franchisees cannot waive rights under the WFIPA, except in specific circumstances involving negotiated settlements with independent counsel. This limits the franchisor's ability to obtain broad releases from franchisees.
Potential Mitigations:
- Ensure all settlement agreements comply with the WFIPA's requirements for waiver of rights, including representation by independent counsel.
- Avoid including provisions in the Franchise Agreement that attempt to circumvent the WFIPA's limitations on waivers.
FDD Citations:
- Item 17, Washington Addendum: "A release or waiver of rights...may not include rights under the Act..."
Territory & Competition Risks
5 risks identified
2
2
1
National/Regional/Onsite Account Customer Program Override
High
Explanation:
- The FDD describes a National/Regional/Onsite Contract Program where the franchisor can allocate clients within your protected territory to other franchisees or even corporate-owned locations. This overrides your territorial exclusivity and significantly impacts your potential revenue.
- The criteria for qualification and the terms of this program are subject to change at the franchisor's discretion, creating uncertainty and potential for unfair competition.
- Even if you qualify, a client can specifically request another franchisee, bypassing you entirely.
Potential Mitigations:
- Carefully review Item 12 and the Operations Manual for specific details of the program, qualification criteria, and revenue-sharing arrangements.
- Negotiate for clearer language regarding the application of this program and your rights as a franchisee within your territory.
- Understand the historical usage and impact of this program on existing franchisees.
FDD Citations:
- Unnumbered Section: "We may institute and administer a “National/Regional/Onsite Contract Program… If you are unqualified or unwilling to serve… we have the right to serve or authorize others to serve…within your Protected Territory…"
Competition from Corporate-Owned Locations
High
Explanation:
- The franchisor's affiliate, G.C. Hall, LLC, operates 4 company-owned outlets offering similar services. This creates direct competition and potential conflict of interest.
- The FDD doesn't clarify the market areas of these corporate locations, raising concerns about potential encroachment on franchisee territories.
Potential Mitigations:
- Request detailed information about the locations and market areas served by G.C. Hall, LLC.
- Inquire about the franchisor's strategy for managing potential conflicts of interest between corporate-owned locations and franchisees.
- Negotiate for stronger territorial protections in your franchise agreement.
FDD Citations:
- Item 1: "As of December 31, 2023, our affiliate, G.C. Hall, LLC (“GC Hall”) operated 4 company-owned outlets… GC Hall has operated businesses of the type being offered…"
Limited Information on Protected Territory
Medium
Explanation:
- The FDD mentions a "Protected Territory" but doesn't provide details about its size, demographics, or exclusivity. This lack of clarity makes it difficult to assess the market potential and competition within your assigned area.
Potential Mitigations:
- Request a detailed description of your Protected Territory, including geographic boundaries, demographics, and existing competition.
- Clarify the criteria used to define and assign territories.
- Consult with an experienced franchise attorney to review the territorial provisions in your franchise agreement.
FDD Citations:
- Unnumbered Section: "You may not provide service to a customer at any location outside your Protected Territory…"
Franchisor Ownership of Invoiced Amounts
Medium
Explanation:
- The franchisor claims ownership of the Gross Invoice Amount upon payment of the first Balance Payment. This unusual arrangement requires careful review to understand its implications for your cash flow and financial control.
Potential Mitigations:
- Seek clarification on the payment terms and the timing of the "Balance Payment." Understand how this affects your working capital and ability to manage receivables.
- Consult with a financial advisor to assess the financial implications of this ownership structure.
FDD Citations:
- Unnumbered Section: "Upon our payment to you of the first Balance Payment for any Gross Invoice Amount, we will become absolute owner of the Gross Invoice Amount relating to such Balance Payment."
Required Legal Structure and Guaranty
Low
Explanation:
- The FDD requires franchisees to operate as a corporation, LLC, or partnership, and owners and their spouses must guarantee the franchise agreement obligations. This can have personal financial implications.
Potential Mitigations:
- Consult with legal and financial advisors to understand the implications of the required legal structure and personal guarantees.
- Ensure you have adequate personal assets to cover potential liabilities.
FDD Citations:
- Item 1: "You must… operate your franchise as a corporation, limited liability company, or general or limited partnership. Your owners will have to guarantee your obligations… Each owner’s spouse will also be required to sign the guaranty…"
Regulatory & Compliance Risks
5 risks identified
1
3
1
Limited Operating History of Current Business Model
Medium
Explanation:
- While AtWork was incorporated in 1992, the current business model being franchised has a shorter operational history. The FDD states that from 1992-2002 and 2003-2011, different franchise models were offered. This shorter track record for the current model presents a risk as there's less established data on its profitability and long-term viability.
Potential Mitigations:
- Thoroughly analyze the financial performance representations for the current model. Scrutinize the data and question the franchisor about the basis for their projections.
- Speak with existing franchisees operating under the current model to understand their experiences, challenges, and successes. Focus on franchisees who have been operating for a longer period within this model.
- Request information on the transition from previous models to the current one. Understand the reasons for the changes and any challenges encountered during the transition.
FDD Citations:
- Item 1: "From 1992 through 2002 we offered only AtWork Personnel Services franchises, and from 2003 through 2011 we offered franchises limited to other specific secondary businesses... These franchises may be operated under different terms than our current offering."
Solely Franchised Business Model
Medium
Explanation:
- The FDD states that AtWork does not operate any businesses of the type being franchised. This lack of direct operational experience in the current model raises concerns about the franchisor's practical understanding of the day-to-day challenges and market realities faced by franchisees.
Potential Mitigations:
- Inquire about the franchisor's rationale for not operating company-owned units. Understand how they gain market insights and operational expertise without direct involvement.
- Assess the experience and qualifications of the franchisor's management team. Determine their relevant industry experience and ability to support franchisees effectively.
- Seek detailed information about the support and training provided by the franchisor. Ensure that the training program adequately addresses the practical aspects of running the business.
FDD Citations:
- Item 1: "We do not operate businesses of the type being offered in this disclosure document."
Affiliate Operating Company-Owned Outlets
Low
Explanation:
- The FDD discloses that an affiliate, G.C. Hall, LLC, operates company-owned outlets. While not directly operated by the franchisor, this arrangement could create potential conflicts of interest, particularly regarding territory allocation, competition, and resource allocation.
Potential Mitigations:
- Carefully review the franchise agreement for any clauses addressing potential conflicts of interest with affiliated companies. Seek clarification on how these conflicts will be managed.
- Inquire about the relationship between the franchisor and G.C. Hall, LLC. Understand the level of shared resources and decision-making processes.
- Investigate the territories in which G.C. Hall operates and ensure there is no overlap or potential for competition with your franchised territory.
FDD Citations:
- Item 1: "As of December 31, 2023, our affiliate, G.C. Hall, LLC ("GC Hall") operated 4 company-owned outlets."
Mandatory Sourcing Restrictions
Medium
Explanation:
- The requirement to purchase certain items or services from designated suppliers restricts franchisees' flexibility and potentially exposes them to higher costs or lower quality compared to alternative options.
Potential Mitigations:
- Obtain a complete list of designated suppliers and the associated costs for goods and services. Compare these costs with market rates to assess their competitiveness.
- Inquire about the quality control measures in place for products and services provided by designated suppliers. Seek feedback from existing franchisees regarding their satisfaction with these suppliers.
- Negotiate with the franchisor for greater flexibility in sourcing, especially if you can demonstrate access to higher quality or lower cost alternatives.
FDD Citations:
- Item 8: "We have the right to require that franchisees purchase certain items or services from a designated supplier."
Limited Recourse for Bankruptcy of Franchisor or Affiliates
High
Explanation:
- While Item 3 states there have been no bankruptcies in the last 10 years, it doesn't guarantee future solvency. If the franchisor or its affiliates were to file for bankruptcy, franchisees could face significant disruptions, loss of support, and potential financial losses with limited recourse.
Potential Mitigations:
- Consult with a legal professional specializing in franchise law to thoroughly review the franchise agreement and understand your rights and protections in the event of franchisor bankruptcy.
- Carefully analyze the franchisor's financial statements and assess their financial stability. Look for trends and indicators of financial health.
- Consider purchasing business interruption insurance to mitigate potential losses in the event of disruptions caused by franchisor bankruptcy.
FDD Citations:
- Item 3 (added to Item 4): "Neither we, our affiliate, officers or general partners... have, during the 10-year period... filed as debtor... a petition to start an action under the U.S. Bankruptcy Code..."
Franchisor Support Risks
3 risks identified
2
1
Limited Pre-Opening Assistance with Site Selection and Lease Negotiation
Medium
Explanation:
- The franchisor provides limited assistance in site selection and lease negotiation, placing the burden of securing a suitable location entirely on the franchisee. This can be challenging for new business owners unfamiliar with commercial real estate.
- The FDD states, "You must, on your own initiative and at your own expense, lease (or buy) and occupy the approved location for your Office. We do not provide you with any assistance in approving or negotiating the lease (or purchase agreement) for the location of your Office."
- This lack of support can lead to delays in opening, unfavorable lease terms, and increased financial strain on the franchisee.
Potential Mitigations:
- Engage a qualified commercial real estate broker experienced in lease negotiations.
- Consult with legal counsel specializing in commercial leases to review and negotiate favorable terms.
- Thoroughly research the local market and demographics to identify optimal locations.
- Develop a detailed budget for leasehold improvements and operating expenses.
FDD Citations:
- Item 11: "You must, on your own initiative and at your own expense, lease (or buy) and occupy the approved location... We do not provide you with any assistance in approving or negotiating the lease..."
Strict Timeframe for Business Opening
Medium
Explanation:
- The requirement to open within 90 days of signing the Franchise Agreement, regardless of site selection and other preparations, creates a tight deadline that may be difficult to meet.
- Delays in site selection, lease negotiations, or other unforeseen circumstances can jeopardize the franchisee's ability to meet this deadline and potentially lead to termination of the agreement.
Potential Mitigations:
- Begin site selection and lease negotiations immediately after signing the Franchise Agreement.
- Maintain open communication with the franchisor regarding progress and any potential delays.
- Develop a detailed project plan with realistic timelines for each stage of the pre-opening process.
- Secure financing and necessary permits in advance.
FDD Citations:
- Item 11: "You must begin operating your Business on a full-time basis on the first Monday following your completion... of the Training Programs, which in no event may be later than 90 days after the effective date of the Franchise Agreement."
Limited Ongoing Support Beyond Core Functions
Low
Explanation:
- While the franchisor handles payroll and certain administrative tasks, the FDD suggests limited ongoing support in other areas crucial for business success, such as marketing and sales strategy, business development, and ongoing training beyond the initial program.
Potential Mitigations:
- Inquire about the availability of additional support resources or optional programs.
- Network with other franchisees to share best practices and learn from their experiences.
- Seek external consulting services for areas where franchisor support is limited.
FDD Citations:
- Item 11: Lists specific ongoing support functions, implying limited involvement beyond those areas.
Exit & Transfer Risks
5 risks identified
1
3
1
Washington State Franchise Investment Protection Act Superseding Franchise Agreement
Medium
Explanation:
- The Washington Franchise Investment Protection Act (RCW 19.100.180) may supersede the Franchise Agreement, particularly regarding termination and renewal. This could lead to outcomes different from those anticipated based solely on the Franchise Agreement.
- Court decisions may also supersede the Franchise Agreement, creating further uncertainty about the enforceability of its terms.
Potential Mitigations:
- Carefully review RCW 19.100.180 and relevant case law to understand potential discrepancies and implications for termination and renewal.
- Consult with a franchise attorney specializing in Washington law to assess the potential impact of the Act and court decisions on the Franchise Agreement.
- Negotiate specific provisions in the Franchise Agreement to address potential conflicts with state law, if possible.
FDD Citations:
- Item 17, Washington Addendum: "RCW 19.100.180 may supersede the Franchise Agreement in your relationship with the franchisor, including the areas of termination and renewal of your franchise. There may also be court decisions which may supersede the Franchise Agreement in your relationship with the franchisor, including the areas of termination and renewal of your franchise."
Restrictions on Non-Compete Clauses (Washington)
Medium
Explanation:
- Washington law (RCW 49.62.020 and 49.62.030) significantly restricts the enforceability of non-compete clauses against employees and independent contractors, based on earnings thresholds. This limits the franchisor's ability to protect its business interests after termination or non-renewal.
Potential Mitigations:
- Understand the specific earnings thresholds in Washington law and how they apply to employees and independent contractors.
- Consult with legal counsel to ensure any non-compete provisions comply with Washington law.
- Consider alternative strategies for protecting confidential information and trade secrets, such as robust confidentiality agreements.
FDD Citations:
- Item 17, Washington Addendum: "Pursuant to RCW 49.62.020, a noncompetition covenant is void and unenforceable against an employee..."
Restrictions on Employee Solicitation (Washington)
Medium
Explanation:
- Washington law (RCW 49.62.060) prohibits franchisors from restricting franchisees from soliciting or hiring employees of the franchisor or other franchisees. This could lead to increased competition for employees and potential disruption of operations.
Potential Mitigations:
- Develop strong employee retention programs to minimize turnover and the incentive for solicitation.
- Focus on creating a positive work environment and offering competitive compensation and benefits.
- Consult with legal counsel to ensure compliance with Washington law regarding employee solicitation.
FDD Citations:
- Item 17, Washington Addendum: "RCW 49.62.060 prohibits a franchisor from restricting, restraining, or prohibiting a franchisee from (i) soliciting or hiring any employee of a franchisee of the same franchisor or (ii) soliciting or hiring any employee of the franchisor."
Waiver of Rights Limitations (Washington)
Low
Explanation:
- The FDD explicitly states it does not waive any liability under the Washington Franchise Investment Protection Act. This reinforces the importance of the Act in governing the franchise relationship.
Potential Mitigations:
- Understand the provisions of the Washington Franchise Investment Protection Act and how they impact the franchise relationship.
- Consult with legal counsel specializing in Washington franchise law to ensure compliance.
FDD Citations:
- Item 17, Washington Addendum: "The Franchise Disclosure Document does not waive any liability we may have under the Washington Franchise Investment Protection Act, RCW 19.100, and the rules adopted thereunder."
Transfer Fee Limitations (Washington)
High
Explanation:
- Transfer fees are limited to the franchisor's reasonable estimated or actual costs in effecting a transfer. This could impact the franchisor's ability to profit from franchise resales and potentially undervalue the franchise.
- This also introduces a potential area of dispute if the franchisee believes the transfer fee exceeds reasonable costs.
Potential Mitigations:
- Carefully review the franchisor's calculation of transfer fees and supporting documentation.
- Consult with a franchise attorney to assess the reasonableness of the transfer fee.
- Negotiate clear terms regarding transfer fees in the Franchise Agreement.
FDD Citations:
- Item 17, Washington Addendum: "Transfer fees are collectable to the extent that they reflect the franchisor’s reasonable estimated or actual costs in effecting a transfer."
Operational & Brand Risks
7 risks identified
2
3
2
Dependence on Franchisor's Designated Suppliers
High
Explanation:
- Franchisees are required to purchase certain items and services from franchisor-designated suppliers (Item 8). This creates dependence and limits flexibility in sourcing potentially cheaper or higher-quality alternatives.
- Changes in designated suppliers or pricing by these suppliers could significantly impact profitability.
- Lack of control over supply chain can lead to disruptions in operations if the designated supplier experiences issues.
Potential Mitigations:
- Carefully review the supplier agreements and pricing structures during due diligence.
- Negotiate with the franchisor for flexibility in sourcing some items, if possible.
- Develop contingency plans for alternative suppliers in case of disruptions.
FDD Citations:
- Item 8: "We have the right to require that franchisees purchase certain items or services from a designated supplier."
- Item 11: "Provide you with a list of specifications...and a list of approved, recommended, or designated suppliers."
Limited Franchisor Support in Site Selection and Lease Negotiation
Medium
Explanation:
- The franchisor provides limited assistance in site selection and lease negotiation (Item 11). Franchisees are responsible for finding and securing their own locations, which can be a challenging and time-consuming process.
- Poor site selection can significantly impact business performance.
Potential Mitigations:
- Conduct thorough market research and demographic analysis to identify optimal locations.
- Consult with experienced real estate professionals to negotiate favorable lease terms.
- Leverage any available resources or guidance from the franchisor, even if limited.
FDD Citations:
- Item 11: "You must, on your own initiative and at your own expense, lease (or buy) and occupy the approved location...We do not provide you with any assistance in approving or negotiating the lease."
Strict Adherence to Operations Manual and Franchisor's Right to Revise It
Medium
Explanation:
- Franchisees are obligated to adhere to the Operations Manual, which the franchisor can revise at any time (Item 11). This limits flexibility in adapting to local market conditions or implementing innovative practices.
- Changes to the manual could require additional investments or changes in operations.
Potential Mitigations:
- Thoroughly review the Operations Manual during due diligence to understand the level of control exerted by the franchisor.
- Seek clarification on the process for revising the manual and the potential impact on franchisees.
- Join the franchisee association (if one exists) to collectively address concerns about changes to the manual.
FDD Citations:
- Item 11: "Under the terms of the Franchise Agreement, we are entitled to revise the Operations Manual at any time, and you will be obligated to adhere to those revised specifications and requirements."
Pressure to Open Quickly with Potential for Termination
High
Explanation:
- Franchisees are required to begin operations within 90 days of signing the Franchise Agreement, which can create significant pressure to find a location, secure financing, and complete training (Item 11).
- Failure to meet this deadline can result in termination of the agreement.
Potential Mitigations:
- Begin the site selection process and secure financing early in the franchising process.
- Ensure all necessary permits and licenses are obtained promptly.
- Maintain open communication with the franchisor regarding any potential delays.
FDD Citations:
- Item 11: "You must begin operating your Business...no later than 90 days after the effective date of the Franchise Agreement. Your failure to meet this deadline will give us the right to terminate your Franchise Agreement."
Mandatory Grand Opening Advertising Spend
Medium
Explanation:
- Franchisees are required to spend at least $5,000 on a grand opening advertising program, which may not be effective or provide a sufficient return on investment (Item 11).
Potential Mitigations:
- Develop a comprehensive marketing plan that maximizes the impact of the grand opening advertising spend.
- Negotiate with the franchisor for flexibility in the advertising program, if possible.
- Track the results of the advertising campaign to measure its effectiveness.
FDD Citations:
- Item 11: "You must spend at least $5,000 for a grand opening advertising program."
Franchisor Control over Pricing
Medium
Explanation:
- The franchisor may set minimum prices for products and services, limiting the franchisee's ability to compete on price or respond to local market conditions (Item 11).
Potential Mitigations:
- Clarify the franchisor's pricing policies and the rationale behind them during due diligence.
- Assess the competitiveness of the franchisor's pricing structure in the target market.
FDD Citations:
- Item 11: "We may periodically set a minimum price that you may charge for products or services."
Risk Related to Handling of Worker Expenses and Risk Management Reserve
Low
Explanation:
- While the franchisor handles worker expenses and maintains a Risk Management Reserve, potential disputes or misunderstandings regarding these funds could arise (Item 11).
Potential Mitigations:
- Carefully review the Franchise Agreement regarding the handling of worker expenses and the Risk Management Reserve.
- Maintain regular communication with the franchisor and request periodic reports on these funds.
FDD Citations:
- Item 11: Sections related to Worker Expenses and Risk Management Reserve.
Performance & ROI Risks
5 risks identified
1
3
1
Lack of Financial Performance Representations
High
Explanation:
- Item 19 explicitly states that no financial performance representations are provided. This makes it difficult to assess the potential profitability of the franchise and creates significant uncertainty about return on investment.
- Without financial benchmarks, prospective franchisees cannot adequately evaluate the business opportunity and may struggle to project revenue, expenses, and ultimately, profitability.
Potential Mitigations:
- Conduct thorough independent research on the staffing industry and comparable businesses in your target market.
- Interview existing franchisees to gain insights into their financial performance, including revenue, expenses, and profitability. Focus on franchisees with similar market demographics and business models.
- Develop realistic financial projections based on your market research and conversations with franchisees. Consult with a financial advisor to ensure your projections are sound.
FDD Citations:
- Item 19: "The earnings claims figures do not reflect the costs of sales, operating expenses or other costs or expenses that must be deducted from gross revenue or gross sales figures to obtain your net income or profit."
Franchisee Turnover and Churn
Medium
Explanation:
- Item 20 details the status of franchised outlets, revealing terminations, non-renewals, and ceased operations. While the numbers aren't alarmingly high, any turnover indicates potential challenges within the franchise system.
- Understanding the reasons behind these changes is crucial. Were they due to market conditions, poor franchisee performance, or disputes with the franchisor?
Potential Mitigations:
- Carefully analyze Table 3 in Item 20 to understand the trends in franchisee turnover. Compare the numbers to industry averages.
- Interview former franchisees to understand why they left the system. This can provide valuable insights into potential challenges and risks.
- Discuss the support provided by the franchisor to struggling franchisees. A robust support system can help mitigate the risk of failure.
FDD Citations:
- Item 20, Table 3: "Status of Franchised Outlets For Years 2021, 2022, 2023"
Competition within the Staffing Industry
Medium
Explanation:
- The staffing industry is highly competitive, with both large national firms and smaller local agencies vying for market share. This competition can impact pricing, client acquisition, and profitability.
- Differentiation and effective marketing are essential for success in this competitive landscape.
Potential Mitigations:
- Research the competitive landscape in your target market. Identify key competitors and their strengths and weaknesses.
- Develop a strong marketing plan to differentiate your AtWork franchise from the competition. Highlight the unique value proposition and benefits of the brand.
- Focus on building strong relationships with clients and candidates to foster loyalty and repeat business.
FDD Citations:
- While not explicitly mentioned in a specific item, the competitive nature of the staffing industry is a general business risk that should be considered.
Dependence on Local Market Conditions
Medium
Explanation:
- The success of a staffing franchise is heavily dependent on local economic conditions. A downturn in the local economy can significantly impact demand for staffing services.
- Factors such as unemployment rates, industry growth, and business investment can all affect the performance of a staffing agency.
Potential Mitigations:
- Thoroughly research the economic conditions in your target market. Analyze historical trends and future projections.
- Develop a diversified client base across multiple industries to reduce reliance on any single sector.
- Maintain a flexible business model that can adapt to changing market conditions.
FDD Citations:
- While not explicitly mentioned in a specific item, the dependence on local market conditions is a general business risk that should be considered.
No FDD-provided startup cost breakdown
Low
Explanation:
- While Item 7 provides an estimated initial investment range, it doesn't offer a detailed breakdown of individual startup costs. This lack of transparency can make it difficult to accurately budget and plan for all initial expenses.
Potential Mitigations:
- Request a detailed breakdown of all startup costs from the franchisor. Inquire about any potential hidden fees or expenses.
- Consult with existing franchisees to get their perspective on actual startup costs and compare them to the franchisor's estimates.
- Develop a comprehensive budget that includes a contingency fund to cover unexpected expenses.
FDD Citations:
- Item 7 provides the initial investment range but lacks a detailed breakdown.
FDD Documents by Year
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FDD Year: 2024
Uploaded: 8/25/2025
FDD Documents
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