Bishops
Beauty & Personal Care
Founded 200740 locationsCompany Profile
Year Founded:2007
Bishops Franchise Cost
| Franchise Fee: | $40,000Key Metric |
| Total Investment: | $313,000 - $634,000Key Metric |
| Liquid Capital: | $80,000 |
| Royalty Fee: | 6% of gross sales |
| Marketing Fee: | 2% of gross sales |
Quick ROI Calculator
Based on Bishops's actual financial data
Outlet Counts by Year
Historical outlet data extracted from FDD documents
Total US Locations:40
Scale relative to 1,000 locations
Franchised Units:40
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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.
12
High Risk
Critical items
35% of total
20
Medium Risk
Monitor closely
59% of total
2
Low Risk
Manageable items
6% of total
34
Total Items
Factors analyzed
10 categories
6.47
Overall Score
Low RiskHigh Risk
010
Franchisor Stability Risks
6 risks identified
2
3
1
Limited Operating History Under Current Ownership
High
Explanation:
- Bishops became the franchisor in April 2022, meaning there's limited historical data on their performance as a franchisor. The FDD relies heavily on the predecessor's experience, which may not be directly comparable.
- The short track record makes it difficult to assess the franchisor's long-term viability and support capabilities under the current management.
Potential Mitigations:
- Thoroughly investigate the reasons for the change in ownership and the relationship between the current franchisor and the predecessor.
- Speak with existing franchisees about their experiences with both the previous and current franchisor, focusing on any changes in support, communication, and overall satisfaction.
- Carefully analyze the financial statements in Exhibit F to understand the financial health and stability of the current franchisor, BCC Services Holding Company.
FDD Citations:
- Item 9: "These figures are based on the experience of our management team with our predecessor since 2018 and with us since 2022..."
- Item 20: "All franchised units before 2023 were offered and sold by our predecessor, Bishops Franchising, LLC. We became the franchisor of the Bishops™ franchise system in April 2022."
Declining Franchise Count
High
Explanation:
- Item 20, Table 1 shows a net decrease of 7 franchise units between 2022 and 2024. This decline raises concerns about the brand's strength, franchisee profitability, and the franchisor's support system.
- While the decline has stabilized in 2024, the reasons for the previous decline need to be thoroughly investigated.
Potential Mitigations:
- Inquire about the reasons for the decline in franchise units. Were they terminations, non-renewals, or other reasons? Understand the specific circumstances and whether they are indicative of systemic issues.
- Speak with former franchisees to understand their reasons for leaving the system. This can provide valuable insights into potential challenges and risks.
- Analyze the franchisor's strategy for growth and franchisee support to assess their commitment to franchisee success.
FDD Citations:
- Item 20, Table 1: Shows a decline in franchise units from 47 in 2022 to 40 in 2024.
Reliance on Predecessor and Affiliate Experience for Financial Projections
Medium
Explanation:
- Item 9 indicates that the financial performance representations rely partly on the experience of the predecessor and affiliate companies. This raises concerns about the relevance and accuracy of these figures for the current franchise offering.
- The predecessor and affiliate may have operated under different business models, cost structures, and market conditions, making their experience less applicable to new franchisees.
Potential Mitigations:
- Request detailed information on the comparability of the predecessor and affiliate businesses to the current franchise model. Understand any key differences that could impact financial performance.
- Consult with a financial advisor to independently evaluate the financial projections and assess their reasonableness based on industry benchmarks and market conditions.
- Compare the provided figures with the financial statements in Exhibit F to assess consistency and identify any potential discrepancies.
FDD Citations:
- Item 9: "These figures are based on the experience of our management team with our predecessor... and the experience of our affiliate companies operating and offering similarly situated franchised businesses."
Limited Financial Transparency of the Franchisor
Medium
Explanation:
- Item 21 states that audited financial statements are provided for the parent's parent company, BCC Services Holding Company, but only 2022 audited financials are available for the franchisor itself. This lack of recent financial information makes it difficult to assess the franchisor's current financial health and stability.
Potential Mitigations:
- Request more recent financial statements for the franchisor directly, not just the parent company. This is crucial for understanding the franchisor's specific financial performance and ability to support franchisees.
- Carefully review the available financial statements and the Guarantee of Performance from BCC Services Holding Company to understand the parent company's commitment and ability to support the franchise system.
- Consult with a financial advisor to assess the financial health of both the franchisor and the parent company.
FDD Citations:
- Item 21: "Exhibit F contains audited financial statements for our parent’s parent BCC Services Holding Company... and its subsidiaries... Exhibit F also contains our audited financial statements as of December 31, 2022."
Uncertainty Regarding Future Growth
Medium
Explanation:
- While Table 5 projects 8 new franchised outlets in the next fiscal year, the relatively small number and the history of declining unit counts raise concerns about the franchisor's ability to achieve sustainable growth.
- The lack of company-owned outlet growth suggests a reliance solely on franchise expansion, which can be risky if not managed effectively.
Potential Mitigations:
- Discuss the franchisor's growth strategy in detail, including their plans for marketing, franchisee recruitment, and ongoing support. Understand their rationale for the projected growth and their plans to address previous declines.
- Analyze the competitive landscape and market demand for the Bishops concept to assess the potential for future growth in your target market.
- Consider the potential impact of new franchise openings on existing franchisees, particularly in terms of market saturation and competition.
FDD Citations:
- Item 20, Table 5: "Projected New Franchised Outlets in the Next Fiscal Year: 8"
Potential for Increased Competition from Existing Franchisees
Low
Explanation:
- Item 20, Table 5 indicates projected new franchise openings. While growth is generally positive, it also introduces the risk of increased competition for existing franchisees, especially if the franchisor doesn't adequately manage territory development.
Potential Mitigations:
- Carefully review the Franchise Agreement for details on protected territories or any restrictions on the franchisor's ability to open new units in close proximity.
- Discuss the franchisor's development plans for your target market and assess the potential impact of new franchisees on your business.
- Consider the overall market size and demographics to determine whether the market can support multiple Bishops locations without excessive competition.
FDD Citations:
- Item 20, Table 5: Provides projections for new franchise openings.
Disclosure & Representation Risks
2 risks identified
2
Lack of Financial Performance Representations
Medium
Explanation:
- The FDD provided lacks Item 19, which typically contains Financial Performance Representations (FPRs). This absence makes it difficult for prospective franchisees to assess the potential profitability of the Bishops franchise and compare it to other opportunities.
- Without FPRs, it's challenging to develop realistic financial projections and evaluate the investment's potential return.
Potential Mitigations:
- Request FPRs directly from the franchisor: Even if not included in the FDD, the franchisor may have compiled internal data or information from existing franchisees that can offer insights into potential financial performance. Insist on receiving this information and analyze it carefully.
- Conduct independent market research: Analyze the local market demographics, competition, and potential customer base to estimate potential revenue. Consult with industry experts and existing business owners in similar fields to gain a better understanding of the financial landscape.
- Benchmark against competitors: Research the financial performance of competing salons and barbershops in similar markets. This can provide a benchmark for potential revenue and profitability, though it's important to recognize that each business is unique.
FDD Citations:
- Item 19 (Missing): The absence of this item is the key indicator of this risk.
Limited Disclosure on Material Modifications to the Franchise Agreement (California)
Medium
Explanation:
- The California state appendix mentions the requirement for disclosure regarding material modifications to the Franchise Agreement but doesn't provide details on what constitutes a "material modification" or the process for such modifications.
- This lack of clarity creates uncertainty about potential future changes to the franchise relationship and the level of control the franchisor has over the franchisee's business operations.
Potential Mitigations:
- Request clarification from the franchisor: Specifically inquire about the franchisor's history of making material modifications to franchise agreements. Ask for examples of past modifications and the rationale behind them.
- Negotiate terms regarding modifications: Discuss with the franchisor the possibility of including provisions in the Franchise Agreement that limit their ability to unilaterally make material modifications or require franchisee approval for such changes.
- Consult with a franchise attorney: Seek legal counsel specializing in franchise law to review the Franchise Agreement and advise on potential risks related to material modifications, particularly in the context of California law.
FDD Citations:
- Exhibit A - State Appendix for California: "The California Corporations Code, Section 31125, requires that we give you a disclosure document, approved by the Department of Financial Protection and Innovation, prior to solicitation of a proposed material modification of your Franchise Agreement."
Financial & Fee Risks
3 risks identified
3
Minimum Royalty Payments After First Year
Medium
Explanation:
- After the first anniversary of the Control Date, a minimum royalty of $250 per week applies regardless of revenue. This fixed cost could significantly impact profitability, especially during slower periods.
Potential Mitigations:
- Develop a robust business plan with conservative revenue projections to account for the minimum royalty.
- Negotiate with the franchisor for a lower minimum royalty or a longer grace period before it takes effect.
- Focus on marketing and sales strategies to consistently exceed the minimum royalty threshold.
FDD Citations:
- Franchise Agreement Summary: "ROYALTY FEE: 6% of Gross Revenue; after the first anniversary of the Control Date, a “Minimum Royalty” of $250 per week shall apply."
Variable and Potentially Increasing Technology Fee
Medium
Explanation:
- The technology fee is currently $200 per month but is subject to increase at the franchisor's discretion. Unpredictable increases in this fee could strain the franchisee's budget and profitability.
Potential Mitigations:
- Inquire about the franchisor's historical technology fee increases and their rationale for future adjustments.
- Budget for potential increases in the technology fee to avoid financial surprises.
- Negotiate a cap on the percentage increase of the technology fee year over year.
FDD Citations:
- Franchise Agreement Summary: "TECHNOLOGY FEE: Currently, $200 per month, subject to increase."
Variable Local Advertising Requirement and Potential MarTech Fee Increase
Medium
Explanation:
- The local advertising requirement changes after the first 12 months, and a MarTech fee, currently $0, is subject to increase. These variable costs make it difficult to accurately project marketing expenses and could impact profitability.
Potential Mitigations:
- Clarify with the franchisor the criteria for determining the MarTech fee and the frequency of potential increases.
- Develop a flexible marketing budget that can accommodate potential increases in the local advertising requirement and MarTech fee.
- Explore alternative local marketing strategies to maximize ROI and potentially reduce reliance on the franchisor's MarTech platform.
FDD Citations:
- Franchise Agreement Summary: "LOCAL ADVERTISING REQUIREMENT: $2,000 per month…Afterwards, $1,500 minimum per month…As a component of the Local Marketing Requirement, there may be a MarTech Fee…Currently, the MarTech Fee is $0 per month, subject to increase."
Legal & Contract Risks
3 risks identified
1
2
Superseding State Law and Court Decisions
Medium
Explanation:
- Washington's Franchise Investment Protection Act (FIPA) and related court decisions may override provisions in the franchise agreement, particularly regarding termination and renewal. This creates uncertainty about the enforceability of certain contract terms.
Potential Mitigations:
- Carefully review the franchise agreement with legal counsel specializing in Washington franchise law to understand potential conflicts between the agreement and FIPA.
- Assess the potential impact of these superseding laws on business operations and long-term planning.
FDD Citations:
- Item 2: "RCW 19.100.180 may supersede provisions in the franchise agreement...concerning your relationship with the franchisor, including in the areas of termination and renewal..."
Release of Rights Limitations
High
Explanation:
- The FDD states that waivers of rights under Washington's FIPA are generally void, except in specific circumstances involving negotiated settlements with independent counsel. This limits the franchisor's ability to enforce waivers and protects franchisees from unknowingly relinquishing their rights.
Potential Mitigations:
- Avoid signing any releases or waivers of rights without consulting with independent legal counsel.
- Ensure any settlement negotiations are conducted with legal representation and a full understanding of the implications.
FDD Citations:
- Item 4: "A release or waiver of rights...purporting to bind the franchisee to waive compliance with any provision under the Washington Franchise Investment Protection Act...is void except when executed pursuant to a negotiated settlement..."
Statute of Limitations and Jury Trial Restrictions
Medium
Explanation:
- The franchise agreement may contain provisions that unreasonably restrict the statute of limitations or the right to a jury trial, which may be unenforceable under Washington law. This could impact a franchisee's ability to pursue legal action against the franchisor.
Potential Mitigations:
- Review the franchise agreement with legal counsel to identify and address any clauses that may unreasonably limit these rights.
- Be aware of the applicable statute of limitations and the importance of timely action in case of disputes.
FDD Citations:
- Item 5: "Provisions contained in the franchise agreement...that unreasonably restrict or limit the statute of limitations period for claims under the Washington Franchise Investment Protection Act, or rights or remedies under the Act such as a right to a jury trial, may not be enforceable."
Territory & Competition Risks
3 risks identified
1
2
No Exclusive Territory
High
Explanation:
- The FDD explicitly states that franchisees are not granted exclusive territories. This means you could face direct competition from other Bishops franchisees, corporate-owned Bishops locations, or even other brands owned by the franchisor.
- This lack of territorial protection can lead to market saturation, reduced customer base, and price wars, significantly impacting profitability.
Potential Mitigations:
- Carefully evaluate the existing Bishops presence and planned expansion in your desired area. A densely populated area might offer enough business for multiple locations, but a smaller market could quickly become oversaturated.
- Discuss your concerns with existing franchisees and inquire about their experiences with competition. Their insights can provide valuable real-world perspectives.
- Focus on building a strong local brand reputation and loyal customer base through exceptional service and community engagement to differentiate yourself from competitors.
FDD Citations:
- Item 12: "You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control."
- Item 12: "We reserve to ourselves all other rights, including the right: (a) own and operate and to grant others the right to own and operate Stores outside the Protected Area, regardless of their proximity to the Protected Area…"
Limited Protected Area
Medium
Explanation:
- While a Protected Area is provided, it's limited in scope and subject to exceptions. The radius can be as small as five blocks in dense urban areas, leaving room for nearby competition.
- The exclusion of "Closed Markets" (hotels, airports, etc.) from the Protected Area further reduces the potential market and creates opportunities for corporate or other franchisees to operate within your general vicinity.
Potential Mitigations:
- Thoroughly analyze the Protected Area offered and its limitations. Use mapping tools to visualize the area and identify potential competitive threats within and just outside the zone.
- Negotiate for the largest possible Protected Area during the franchise agreement process. While not always possible, demonstrating a strong understanding of the market and potential competition can strengthen your position.
- Understand the right of first refusal for Closed Markets within your Protected Area. Be prepared to capitalize on these opportunities if they arise, but recognize they are not guaranteed.
FDD Citations:
- Item 12: "…the Protected Area will typically be a one-and-a-half-mile radius around the Store, unless your Store is located in a densely populated area… in which case your Protected Area may be limited to a radius of anywhere between five blocks and one-half of a mile around your Store."
- Item 12: "Excepted out from the Protected Area will be venues within the Protected Area that we consider ‘Closed Markets.’"
Competition from Other Channels
Medium
Explanation:
- The franchisor reserves the right to distribute products and services through alternative channels like online sales, retail stores, and other methods, potentially competing with franchisees.
- This competition from the franchisor itself can undermine franchisee sales and profitability, especially if online pricing undercuts in-store prices.
Potential Mitigations:
- Clarify the franchisor's strategy for online sales and other distribution channels. Understand how they plan to manage potential channel conflict and support franchisee businesses.
- Focus on providing a superior in-store experience that cannot be replicated online, such as personalized consultations, expert services, and a welcoming atmosphere.
- Explore opportunities to leverage online channels yourself, perhaps through local marketing and online booking systems, to complement your in-store business.
FDD Citations:
- Item 12: "…we reserve to ourselves… the right to distribute products and services… within and outside of your Protected Area through alternative channels of distribution including mail order, catalog sales, department stores, retail stores, supermarkets, and/or Internet sales."
Regulatory & Compliance Risks
3 risks identified
2
1
Uncertain Initial Investment
High
Explanation:
- The FDD provides a wide investment range ($313,000 - $634,000) without clearly outlining the factors contributing to this variability. Note 9 and 10 highlight numerous factors that can significantly impact actual startup costs, creating uncertainty for prospective franchisees.
- The estimates provided only cover the first three months (Note 10) and the initial phase of 8-12 months (Note 9), leaving franchisees potentially unprepared for ongoing expenses beyond this period.
- The FDD explicitly states that the franchisor cannot guarantee against additional expenses (Note 10), further amplifying the financial risk.
- The exclusion of financing costs, interest, and debt service obligations from the estimates (Note 9) underestimates the true financial burden.
Potential Mitigations:
- Conduct thorough due diligence, including independent market research and financial analysis, to develop a realistic budget that accounts for potential cost overruns.
- Consult with experienced franchise attorneys and financial advisors to review the FDD and assess the financial viability of the franchise opportunity.
- Secure pre-approval for financing that covers the high end of the investment range and potential unforeseen expenses.
- Develop a detailed business plan with conservative revenue projections and contingency plans for managing cash flow during the initial and subsequent operational phases.
FDD Citations:
- Item 7, Note 9: "You may incur additional expenses in starting up your Store, and your actual costs may vary considerably..."
- Item 7, Note 10: "These figures are estimates of your initial expenses covering the first three months of your operation. We cannot guarantee you will not have additional expenses starting the business."
Lack of Historical Franchisee Performance Data
High
Explanation:
- The FDD lacks Item 19, which typically provides historical financial performance representations of existing franchisees. This absence makes it difficult for prospective franchisees to assess the potential profitability and financial viability of the business.
- Relying solely on management's experience with the predecessor (since 2018) and the current brand (since 2022) as cited in Note 9, provides a limited and potentially biased view of the franchise's financial track record.
Potential Mitigations:
- Request financial information directly from existing franchisees to gain insights into their actual performance and profitability.
- Conduct independent market research and competitive analysis to assess the demand for the services offered and the potential for success in the target market.
- Engage experienced franchise consultants to evaluate the franchise opportunity and provide an objective assessment of its financial prospects.
FDD Citations:
- Item 7, Note 9: "These figures are based on the experience of our management team with our predecessor since 2018 and with us since 2022..."
- Item 19: (Absent)
Alcohol Licensing Compliance
Medium
Explanation:
- Note 9 mentions costs associated with obtaining licensing for complimentary alcoholic beverages are not included in the estimated initial investment. This creates a potential compliance risk if franchisees are unaware of the requirements and costs involved in obtaining and maintaining such licenses.
- Variations in local alcohol regulations can further complicate compliance and increase costs.
Potential Mitigations:
- Carefully review Item 1 for details on the alcohol licensing requirements and consult with legal counsel specializing in alcohol regulations in the target market.
- Include the estimated costs of obtaining and maintaining the necessary licenses in the overall business plan and budget.
- Develop procedures for responsible alcohol service and ensure all employees are trained on relevant regulations.
FDD Citations:
- Item 7, Note 9: "These figures do not include any costs or fees associated with obtaining licensing to furnish alcoholic beverages...which is further described in Item 1..."
Franchisor Support Risks
3 risks identified
2
1
Limited Financial Performance Representation
Medium
Explanation:
- Item 19 provides revenue data for only 39 locations that operated for the full 2024 calendar year, segmented by quartiles. This limited sample size may not accurately represent the potential performance of all franchisees, especially in different markets and with varying levels of experience.
- The FDD explicitly states, "Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much." This disclaimer highlights the uncertainty of achieving similar results.
- The data only covers one year, which may not reflect long-term trends or account for seasonality or economic fluctuations.
Potential Mitigations:
- Request the substantiation data mentioned in the FDD to understand the basis for the presented figures.
- Conduct independent market research in your target area to assess local demand and competition.
- Develop realistic financial projections based on conservative assumptions and consult with a financial advisor.
- Speak with existing franchisees outside the presented sample to gain a broader perspective on financial performance.
FDD Citations:
- Item 19: "Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much."
- Item 19: Table 1 – Revenue Comparison by Quartile
- Item 19: "Substantiation of the data used in preparing this financial performance representation will be made available to you upon reasonable request."
No Exclusive Territory
High
Explanation:
- The FDD states, "You will not receive an exclusive territory." This lack of territorial protection exposes franchisees to potential competition from other Bishops franchisees, as well as from the franchisor itself, which could significantly impact revenue and profitability.
Potential Mitigations:
- Carefully evaluate the market density and potential for future Bishops locations in your desired area.
- Negotiate with the franchisor for a defined area of primary responsibility, even if it's not formally exclusive.
- Focus on building strong local brand recognition and customer loyalty to differentiate yourself from potential competitors.
FDD Citations:
- Item 12: "You will not receive an exclusive territory."
Negative Stockholders' Equity
High
Explanation:
- Item 7 discloses that the franchisor's stockholders' equity was negative $(3,055,433) as of December 31, 2023. This negative equity raises concerns about the franchisor's financial stability and its ability to provide ongoing support and resources to franchisees.
Potential Mitigations:
- Carefully review the franchisor's financial statements in Item 21 to understand the reasons for the negative equity and assess their financial health.
- Inquire about the franchisor's plans to address the negative equity and improve their financial position.
- Consult with a financial advisor to evaluate the potential risks associated with investing in a franchise with negative stockholders' equity.
FDD Citations:
- Item 7: "This amount exceeds the franchisor’s stockholders’ negative equity as of December 31, 2023, which is $(3,055,433)."
Exit & Transfer Risks
5 risks identified
1
3
1
Restrictive Transfer Provisions & Associated Costs
Medium
Explanation:
- Item 6 mentions transfer fees are collectable only to the extent of reasonable costs. However, the FDD doesn't define "reasonable," leaving room for disputes over transfer fees. The lack of clarity could make it difficult to transfer the franchise and potentially impact its resale value.
- Item 19 discusses the release of franchise fees proportionally with each franchise outlet opened. This implies a multi-unit development agreement, which can complicate transfers as the entire agreement might be affected by the sale of a single unit.
Potential Mitigations:
- Negotiate clear language in the franchise agreement defining "reasonable costs" for transfers, including specific examples and a cap on potential fees.
- If it's a multi-unit agreement, ensure the agreement allows for individual unit transfers without impacting the other units. Clarify the process and costs associated with partial transfers.
- Consult with a franchise attorney to review the transfer provisions and negotiate favorable terms before signing the agreement.
FDD Citations:
- Item 6: "Transfer fees are collectable only to the extent that they reflect the franchisor’s reasonable estimated or actual costs in effecting a transfer."
- Item 19: "...payment of the franchise fee will be released proportionally with respect to each franchise outlet opened..."
Limited Termination Rights & Buy-Back Provisions
Medium
Explanation:
- Item 7 states termination is allowed under state law, but doesn't specify the grounds, creating uncertainty. Franchisees need clear understanding of their termination rights.
- Item 8 prohibits franchisor repurchase without consent unless terminated for "good cause." The FDD lacks a clear definition of "good cause," potentially giving the franchisor undue power.
Potential Mitigations:
- Consult with a Washington state franchise attorney to understand the specific grounds for termination allowed under state law.
- Negotiate specific and clearly defined "good cause" events for franchisor repurchase in the franchise agreement.
- Include a clause requiring mutual agreement or a third-party appraisal for determining the repurchase price.
FDD Citations:
- Item 7: "The franchisee may terminate the franchise agreement under any grounds permitted under state law."
- Item 8: "Provisions...that permit the franchisor to repurchase...without the franchisee’s consent are unlawful...unless the franchise is terminated for good cause."
Potential Conflicts with Washington State Law
High
Explanation:
- Multiple items highlight potential conflicts between the franchise agreement and Washington State law. This indicates a risk that certain provisions in the agreement may be unenforceable, leading to disputes and legal challenges.
- The repeated references to RCW statutes suggest the franchisor has a history of attempting to include provisions that are not compliant with Washington law, which is a red flag.
Potential Mitigations:
- Have a Washington state franchise attorney thoroughly review the franchise agreement to ensure full compliance with state law.
- Request clarification from the franchisor on any discrepancies between the FDD and Washington law, and ensure any conflicting provisions are removed or amended.
- Be wary of signing any waivers or releases that could limit your rights under Washington State law.
FDD Citations:
- Multiple items (2, 3, 4, 5, 10, 11, 12, 13, 14, 15, 16, 17) reference specific RCW statutes and potential conflicts with the franchise agreement.
Franchise Broker Relationship
Low
Explanation:
- Item 18 advises caution when working with franchise brokers, as they represent the franchisor. This can create a potential conflict of interest, as the broker's primary goal is to sell the franchise, not necessarily to act in the franchisee's best interest.
Potential Mitigations:
- Conduct independent research and due diligence on the franchise opportunity, rather than relying solely on information provided by the broker.
- Consult with a franchise attorney to review the franchise agreement and other documents before signing anything.
- Be aware of any incentives or commissions the broker is receiving from the franchisor, as this can influence their recommendations.
FDD Citations:
- Item 18: "If a franchisee is working with a franchise broker, franchisees are advised to carefully evaluate any information provided by the franchise broker about a franchise."
“Fair and Reasonable” Pricing Ambiguity
Medium
Explanation:
- Item 9 states that requiring purchases at more than a "fair and reasonable" price is unlawful. However, the FDD doesn't define "fair and reasonable," creating potential for disputes over pricing and supply costs.
Potential Mitigations:
- Request detailed information on the cost of goods and services required by the franchisor, and compare them to market prices.
- Negotiate a clear definition of "fair and reasonable" pricing in the franchise agreement, potentially including benchmarks or price caps.
- Consult with other franchisees to understand their experiences with supplier pricing and potential markups.
FDD Citations:
- Item 9: "Any provision...that requires the franchisee to purchase or rent any product or service for more than a fair and reasonable price is unlawful..."
Operational & Brand Risks
3 risks identified
1
2
Wide Range of Financial Performance
High
Explanation:
- Item 19 shows a substantial disparity in revenue figures between top and bottom quartile performers. The average revenue for the top quartile is $735,604, while the bottom quartile averages only $321,101. This wide range indicates significant variability in franchisee success and suggests factors beyond the franchisor's control influence profitability.
- The high revenue in the top quartile may be outliers and not representative of typical franchise performance, creating unrealistic expectations for potential franchisees.
Potential Mitigations:
- Thoroughly investigate the reasons behind the performance gap. Interview franchisees in all quartiles to understand the factors contributing to their success or struggles.
- Develop a realistic business plan based on the lower quartile performance figures to prepare for potential challenges.
- Request detailed information from the franchisor on the specific factors influencing the performance of each quartile, including location demographics, marketing efforts, and operational efficiency.
FDD Citations:
- Item 19, Table 1: Revenue Comparison by Quartile
- Item 19: "Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much."
No Exclusive Territory
Medium
Explanation:
- The lack of an exclusive territory exposes franchisees to potential competition from other Bishops franchisees and even corporate-owned locations. This can lead to market saturation and cannibalization of sales, impacting individual franchisee profitability.
Potential Mitigations:
- Carefully assess the existing and planned Bishops locations in your target market to evaluate the competitive landscape.
- Negotiate with the franchisor for a defined area of operation, even if it's not formally exclusive, to gain some level of market protection.
- Focus on building strong local brand recognition and customer loyalty to differentiate yourself from competitors.
FDD Citations:
- Item 12: "You will not receive an exclusive territory."
Franchisee Turnover and Closures
Medium
Explanation:
- Item 20 reveals a net decrease of 7 franchise units between 2022 and 2024. This indicates a history of franchisee turnover, which could be a sign of underlying issues within the franchise system, such as inadequate support, unrealistic expectations, or market saturation.
- The reasons for terminations, non-renewals, and ceased operations are not explicitly stated, making it difficult to assess the specific risks involved.
Potential Mitigations:
- Investigate the reasons behind the franchisee turnover. Contact former franchisees listed in Exhibit G to understand their experiences and reasons for leaving the system.
- Analyze the locations of closed or transferred units to identify potential market-specific challenges.
- Request updated information from the franchisor on the current status of the franchise system and any recent changes in franchisee performance.
FDD Citations:
- Item 20, Table 1: Systemwide Outlet Summary
- Item 20, Table 3: Status of Franchised Outlets
Performance & ROI Risks
3 risks identified
2
1
Wide Range in Revenue Performance
High
Explanation:
- Item 19 shows a substantial disparity in revenue figures between top and bottom quartile performers. The average revenue for the top quartile ($735,604) is more than double the bottom quartile ($321,101). This wide range indicates significant variability in potential earnings and suggests factors beyond the franchisor's control influence success.
- The difference between the high and low performers within each quartile is also significant, further highlighting the unpredictable nature of revenue generation.
Potential Mitigations:
- Carefully analyze the factors contributing to the success of top-performing franchises. Investigate their location demographics, marketing strategies, management practices, and customer base.
- Engage with franchisees from all quartiles to understand the challenges and opportunities they've experienced. Ask specific questions about their revenue generation strategies and cost management practices.
- Develop a conservative financial projection based on the lower quartile performance figures to prepare for potential downside scenarios.
FDD Citations:
- Item 19, Table 1: Revenue Comparison by Quartile
- Item 19, Notes to Table 1: Median, High, and Low Revenue Figures
Limited Franchisee Sample Size for Performance Data
Medium
Explanation:
- The revenue data in Item 19 is based on a relatively small sample size of only 39 locations. This limited sample may not accurately represent the broader franchise system's performance and could skew the results.
- A larger sample size would provide a more reliable and statistically significant representation of potential earnings.
Potential Mitigations:
- Request additional performance data from the franchisor, including data from previous years or from franchises that did not operate for the full measurement period.
- Supplement the FDD data with independent market research and industry benchmarks to gain a broader understanding of the business potential.
- Consult with experienced franchise consultants or accountants to assess the reliability of the provided financial information.
FDD Citations:
- Item 19: "The following group of tables includes representations from 39 locations..."
No Assurance of Earnings
High
Explanation:
- The FDD explicitly states, "There is no assurance that you’ll earn as much." This disclaimer highlights the inherent risk in franchising and emphasizes that individual results can vary significantly.
- The franchisor does not guarantee any specific level of profitability, placing the onus on the franchisee to achieve financial success.
Potential Mitigations:
- Develop a comprehensive business plan that addresses local market conditions, competitive landscape, and operational efficiency.
- Secure adequate financing to cover startup costs and operating expenses during the initial ramp-up period.
- Actively participate in the franchisor's training and support programs to gain the necessary skills and knowledge for successful operation.
FDD Citations:
- Item 19: "Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much."
FDD Documents by Year
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FDD Year: 2025
Uploaded: 8/9/2025
FDD Documents
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