Clean Juice
Food and Beverage
Founded 201680 locationsCompany Profile
Year Founded:2016
Clean Juice Franchise Cost
| Franchise Fee: | $30,000Key Metric |
| Total Investment: | $243,000 - $419,000Key Metric |
| Liquid Capital: | $57,500 |
| Royalty Fee: | 6% of gross sales |
| Marketing Fee: | 2% of gross sales |
Quick ROI Calculator
Based on Clean Juice's actual financial data
Outlet Counts by Year
Historical outlet data extracted from FDD documents
Total US Locations:80
Scale relative to 1,000 locations
Franchised Units:69
Corporate Units:11
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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.
13
High Risk
Critical items
30% of total
24
Medium Risk
Monitor closely
55% of total
7
Low Risk
Manageable items
16% of total
44
Total Items
Factors analyzed
10 categories
5.68
Overall Score
Low RiskHigh Risk
010
Franchisor Stability Risks
6 risks identified
2
3
1
Recent Acquisition and Lack of Historical Data
High
Explanation:
- The franchisor, Clean Juice, was recently acquired in an asset transaction in May 2024. This recent change in ownership introduces significant uncertainty regarding the brand's future direction and stability.
- The FDD acknowledges a lack of reliable information about corporate stores between December 31, 2023, and May 19, 2024, and states that the provided data is from the predecessor's FDD and unverified. This information gap makes it difficult to assess the true historical performance of the brand.
- The reliance on predecessor data and the lack of current financial information beyond July 16, 2024 (Item 21), create a significant blind spot for potential franchisees trying to evaluate the financial health and stability of the system.
Potential Mitigations:
- Request updated financial information directly from the franchisor, including detailed information about the acquisition and its impact on operations.
- Consult with a financial advisor to analyze the available financial data and assess the potential risks associated with the recent acquisition.
- Thoroughly research the new ownership group and their experience in the franchise industry.
FDD Citations:
- Item 1: "As disclosed in Item 1, we acquired the system in an asset transaction that closed on May 20, 2024."
- Item 21: "Attached to this disclosure documents as Exhibit E are our: Audited balance sheet as of July 16, 2024 (for the time period commencing as of May 20, 2024)"
- Table 5: "The information in the chart regarding corporate stores was obtained from our predecessor’s franchise disclosure document."
Limited Operating History Under Current Ownership
High
Explanation:
- The franchisor has limited operating history under the current ownership, having only operated since May 20, 2024. This short timeframe provides little insight into the new management's ability to successfully operate and support the franchise system.
- The lack of long-term performance data under current management makes it difficult to project future success and assess the stability of the franchise system.
Potential Mitigations:
- Carefully evaluate the experience and track record of the new management team.
- Seek out and speak with existing franchisees about their experiences with the new ownership.
- Consider the potential risks associated with investing in a franchise with limited operating history under current management.
FDD Citations:
- Item 21: "We have not been in business for three years or more and, therefore, cannot include all the financial statements required by this Item."
- Item 1: "As disclosed in Item 1, we acquired the system in an asset transaction that closed on May 20, 2024."
Limited Growth Projections
Medium
Explanation:
- The projected new franchised outlets for the next fiscal year are relatively low (only 4), indicating potentially slow growth and limited expansion opportunities for franchisees.
- While 8 franchise agreements are signed but not yet open, the slow projected growth raises concerns about market saturation or the franchisor's ability to support rapid expansion.
Potential Mitigations:
- Discuss the growth strategy with the franchisor and understand their plans for future expansion.
- Analyze the competitive landscape in your target market to assess the potential for growth.
- Consider the implications of slow growth on your potential return on investment.
FDD Citations:
- Table 5: "Projected New Franchised Outlets in Next Fiscal Year: 4"
- Table 5: "Franchise Agreements Signed But Outlets Not Open: 8"
No Company-Owned Outlets
Medium
Explanation:
- The franchisor does not own or operate any Clean Juice corporate stores. This lack of company-owned stores could indicate a reduced commitment to the brand and a potential lack of direct operational experience.
- While previously acquired outlets are now considered franchised, the absence of ongoing company-owned operations may limit the franchisor's ability to test new products, services, and operational strategies.
Potential Mitigations:
- Inquire about the franchisor's strategy for maintaining brand consistency and operational excellence without company-owned stores.
- Assess the franchisor's support infrastructure and training programs to ensure they can adequately support franchisees.
FDD Citations:
- Item 1: "We do not own or operate any Clean Juice corporate stores; any outlets acquired that were previously classified as corporate stores are now considered franchised outlets as of the date of acquisition."
- Table 5: "Projected New Company-Owned Outlets in Next Fiscal Year: 0"
Potential Communication Restrictions for Franchisees
Medium
Explanation:
- The FDD mentions that some current and former franchisees have signed agreements restricting their ability to speak openly about their experiences. This could limit your ability to gather unbiased information about the franchise system from existing and former franchisees.
Potential Mitigations:
- Consult with an attorney to review any confidentiality or non-disparagement clauses in the franchise agreement.
- Network with as many current and former franchisees as possible, despite potential limitations, to gather diverse perspectives.
- Rely on other sources of information, such as industry reports and online reviews, to supplement your research.
FDD Citations:
- Item 20: "In some instances, current and former franchisees sign provisions restricting their ability to speak openly about their experience with the CLEAN JUICE franchise system."
No Independent Franchisee Association
Low
Explanation:
- The absence of an independent franchisee association could limit franchisees' collective bargaining power and ability to address concerns with the franchisor.
Potential Mitigations:
- Discuss the possibility of forming a franchisee association with other franchisees.
- Carefully review the franchise agreement and understand your rights and obligations as a franchisee.
FDD Citations:
- Item 20: "There are no franchisee organizations sponsored or endorsed by us, and no independent franchisee organizations have asked to be included in this disclosure document."
Disclosure & Representation Risks
3 risks identified
2
1
Lack of Regulatory Endorsement (California)
Medium
Explanation:
- The FDD explicitly states that registration in California does not constitute approval, recommendation, or endorsement by the Commissioner of the Department of Financial Protection and Innovation. This lack of endorsement could potentially influence investor perception and confidence.
- The added statement about the website not being reviewed by the DFPI further emphasizes the lack of official oversight, which could raise concerns for some potential franchisees.
Potential Mitigations:
- Acknowledge this disclaimer upfront with potential California franchisees and emphasize the brand's reputation and track record despite the lack of state endorsement.
- Provide additional resources and testimonials from successful franchisees to build confidence and demonstrate the brand's value proposition.
- Highlight any other relevant certifications or recognitions the brand has received to offset the lack of state-specific endorsement.
FDD Citations:
- Item 23, State Specific Addenda - California: "Registration of this franchise does not constitute approval, recommendation, or endorsement by the Commissioner of the Department of Financial Protection and Innovation."
- Item 23, State Specific Addenda - California: "OUR WEBSITE HAS NOT BEEN REVIEWED OR APPROVED BY THE CALIFORNIA DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION."
Incomplete Information in Item 3 Addendum (California)
Medium
Explanation:
- The addendum to Item 3 for California starts with "With the exception of what is stated above, the following applies..." but cuts off abruptly. This incomplete information creates ambiguity and prevents a full understanding of the franchisor's background and litigation history as it pertains to California.
- The missing information could hide potential red flags that are crucial for a prospective franchisee's due diligence.
Potential Mitigations:
- Request the complete addendum to Item 3 for California from the franchisor. This is crucial for making an informed decision.
- Consult with a franchise attorney to understand the implications of the missing information and to ensure you have a complete picture of the franchisor's legal and business history in California.
FDD Citations:
- Item 23, State Specific Addenda - California, Item 3 Addendum: "With the exception of what is stated above, the following applies to the franchisor, its predecessor, a person"
Limited Bankruptcy Disclosure
Low
Explanation:
- While the FDD states that no bankruptcy is required to be disclosed, this doesn't necessarily mean there haven't been any financial difficulties. The absence of bankruptcy doesn't guarantee financial stability.
Potential Mitigations:
- Review the franchisor's financial statements carefully (Item 21) to assess their current financial health and stability.
- Inquire about any past financial challenges or restructuring that may not qualify as formal bankruptcy but could still impact the franchisor's stability.
- Research the franchisor's overall business performance and track record through independent sources.
FDD Citations:
- Item 4: Bankruptcy: "No bankruptcy is required to be disclosed in this disclosure document."
Financial & Fee Risks
5 risks identified
1
3
1
Franchisor Undercapitalization
High
Explanation:
- The FDD explicitly states that the franchisor, Clean Juice, has not demonstrated adequate capitalization and may rely on franchise fees to fund operations. This raises serious concerns about the franchisor's financial stability and ability to fulfill its obligations to franchisees, especially regarding providing ongoing support and resources.
- The imposed fee deferral condition by the Department for California franchisees further highlights this risk. While seemingly beneficial to California franchisees, it underscores the franchisor's financial constraints and potential dependence on future franchise sales for operational funding.
Potential Mitigations:
- Carefully review Clean Juice's financial statements and seek expert advice to assess their financial health and long-term viability.
- Request detailed information on how Clean Juice plans to fund its operations and support franchisees, especially in light of the fee deferral condition.
- Consider the implications of the fee deferral for California franchisees, including potential delays in receiving support and resources.
- Negotiate stronger contractual provisions regarding the franchisor's obligations and remedies in case of financial distress.
FDD Citations:
- Item 4: "The Department has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations."
- Item 4: "The Commissioner has imposed a fee deferral condition..."
Reliance on Item 19 Earnings Claims
Medium
Explanation:
- The FDD disavows all oral representations and emphasizes that only the written agreement and Item 19 contain valid information regarding earnings claims. This limits the franchisee's ability to rely on any other information or projections provided by the franchisor.
- Item 19 itself may contain limitations and disclaimers, making it crucial to carefully analyze the presented information and understand its context.
Potential Mitigations:
- Thoroughly review Item 19 and understand the methodology used to calculate earnings claims, including any underlying assumptions and limitations.
- Consult with a financial advisor to evaluate the reasonableness of the presented figures and compare them to industry benchmarks.
- Conduct independent market research and due diligence to assess the potential profitability of the franchise in your specific location.
- Avoid relying solely on Item 19 and develop your own financial projections based on realistic assumptions.
FDD Citations:
- Item 14.10: "You agree that no claims...regarding actual or potential earnings...have been made to you other than as set forth in Item 19 of the FDD."
No Affiliate Liability
Medium
Explanation:
- The FDD states that no affiliate of Clean Juice will be liable for any obligations or claims arising from the franchise agreement. This limits the franchisee's recourse in case of disputes or breaches involving related entities.
- This provision can be particularly concerning if the franchisor relies heavily on affiliates for providing essential services or support.
Potential Mitigations:
- Identify all affiliates of Clean Juice and understand their roles and responsibilities in the franchise system.
- Assess the potential impact of this provision on your ability to enforce the franchise agreement and seek remedies in case of disputes.
- Negotiate alternative dispute resolution mechanisms or contractual provisions to address potential issues arising from the involvement of affiliates.
- Seek legal advice to fully understand the implications of this clause and its potential impact on your rights as a franchisee.
FDD Citations:
- Item 14.11: "No past, present or future...Affiliate...will have any liability for...any obligations or liabilities Clean Juice has relating to or arising from this Agreement."
Competition from "Closed Markets"
Medium
Explanation:
- The definition of "Closed Market" in the glossary is extensive and includes various locations where Clean Juice is excluded from operating. This can limit the franchisee's potential market and create competition from similar businesses operating within these excluded areas.
- The exclusion of "Closed Markets" may restrict expansion opportunities and impact the overall growth potential of the franchise.
Potential Mitigations:
- Carefully review the definition of "Closed Market" and identify specific locations within your territory that are excluded.
- Assess the potential impact of these exclusions on your target market and potential customer base.
- Analyze the competitive landscape in your area, considering the presence of similar businesses operating within "Closed Markets."
- Develop a targeted marketing strategy to reach customers outside of the excluded areas and differentiate your business from competitors.
FDD Citations:
- Attachment A - Glossary of Additional Terms: Definition of "Closed Market."
Dependence on Clean Juice's System
Low
Explanation:
- The FDD emphasizes the importance of adhering to Clean Juice's system, including its proprietary recipes, standards, and manuals. This creates a dependence on the franchisor for essential operational aspects and limits the franchisee's flexibility to adapt to local market conditions or customer preferences.
Potential Mitigations:
- Thoroughly review the manuals and understand the specific requirements and restrictions imposed by Clean Juice's system.
- Discuss with existing franchisees their experiences with the system and any challenges they have faced.
- Evaluate the potential impact of system limitations on your ability to innovate and respond to changing market demands.
FDD Citations:
- Attachment A - Glossary of Additional Terms: Definitions of "Confidential Information," "Copyrighted Works," and "Manuals."
Legal & Contract Risks
3 risks identified
2
1
Wisconsin Fair Dealership Law Superseding Franchise Agreement
High
Explanation:
- Item 17 states that the Wisconsin Fair Dealership Law supersedes any inconsistent provisions in the Franchise Agreement for franchisees subject to it. This creates uncertainty and potential conflict between the FDD and state law.
- The specific inconsistencies are not detailed, requiring careful legal review to understand the implications for franchisees in Wisconsin.
- This could lead to unexpected obligations or limitations on franchisee rights compared to franchisees in other states.
Potential Mitigations:
- Consult with an attorney specializing in Wisconsin franchise law to understand the full impact of the Fair Dealership Law on the franchise agreement.
- Request clarification from the franchisor regarding specific areas where the Wisconsin law overrides the agreement.
- Compare the Franchise Agreement with the Wisconsin Fair Dealership Law to identify potential discrepancies and understand your rights and obligations.
FDD Citations:
- Item 17: "For franchisees subject to the Wisconsin Fair Dealership Law, Ch. 135, Stats., provisions in the Fair Dealership Law supersede any inconsistent provisions of the Franchise Agreement or a related contract."
Limited Grant of Rights and Restrictions on Business Operations
High
Explanation:
- The franchise grant is limited to operating a single Clean Juice Store at the specified location, with restrictions on sublicensing, co-branding, catering, delivery, and wholesale distribution.
- These restrictions significantly limit the franchisee's ability to expand their business or adapt to changing market conditions.
- The franchisor's broad reservation of rights not explicitly granted further restricts the franchisee's flexibility and autonomy.
Potential Mitigations:
- Carefully review Section 1.1 and understand the full extent of the limitations on your business operations.
- Discuss the rationale behind these restrictions with the franchisor and explore possibilities for greater flexibility in the future.
- Consider the long-term implications of these limitations on your business growth potential.
FDD Citations:
- Item 1, Section 1.1: "This Agreement specifically grants you no right, among others, to (a) sublicense the use of the System or Marks, (b) to co-brand with another concept, (c) to provide on-site catering services... without Clean Juice’s prior written consent, (d) to deliver or ship Clean Juice products... without Clean Juice’s prior written consent, or (e) to distribute Clean Juice products through wholesale channels..."
Protected Area Limitations and Exceptions
Medium
Explanation:
- The Protected Area provision offers limited exclusivity, with exceptions for "Closed Markets" and potential competition from acquired businesses.
- The definition of "Closed Markets" is not provided in the excerpt, creating uncertainty about the level of competition a franchisee might face.
- The franchisor's ability to operate or franchise acquired businesses within the Protected Area could significantly erode the franchisee's market share.
Potential Mitigations:
- Request a clear definition of "Closed Markets" and identify their locations within your potential Protected Area.
- Assess the competitive landscape in your area, considering potential competition from both existing and future Clean Juice locations, as well as acquired businesses.
- Negotiate for a more clearly defined and restrictive Protected Area, if possible.
FDD Citations:
- Item 1, Section 1.2: "During the term of this Agreement, Clean Juice will not own or operate, or grant anyone else the right to operate a Clean Juice Store in the Protected Area, except (a) for sales in ‘Closed Markets’ (which are carved out from territorial protection, as described in Attachment B), and (b) if Clean Juice purchases, merges, acquires, or affiliates with another business..."
Territory & Competition Risks
3 risks identified
2
1
No Exclusive Territory
High
Explanation:
- The FDD explicitly states that no exclusive territory is granted. This means franchisees may face competition from other Clean Juice franchisees, corporate-owned stores, and other distribution channels, even within close proximity.
- This significantly increases the risk of market saturation and cannibalization, potentially impacting profitability.
Potential Mitigations:
- Thoroughly research the existing and planned Clean Juice locations in your target area to assess potential competition.
- Develop a strong local marketing strategy to differentiate your store and build a loyal customer base.
- Focus on operational efficiency and excellent customer service to gain a competitive edge.
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."
Limited Protected Area
Medium
Explanation:
- While a Protected Area is defined, it can be very small, especially in densely populated areas. This limited protection increases the risk of encroachment from other franchisees, even if they are not directly within the Protected Area.
- The size of the Protected Area is subject to franchisor approval and can vary significantly based on location.
Potential Mitigations:
- Negotiate the largest possible Protected Area during the site selection process.
- Clearly understand the criteria used by the franchisor to determine Protected Area size.
- Research the demographics and competitive landscape within and around the proposed Protected Area.
FDD Citations:
- Item 12: "The minimum Protected Area may be as small as an office or retail building for Stores located in densely populated, urban areas such as New York City, and will likely be larger in suburban, less populated areas."
Competition from \
High
Explanation:
- The franchisor reserves the right to operate or license Clean Juice stores in "Closed Markets" within a franchisee's Protected Area. These include a wide range of venues like malls, airports, stadiums, and other high-traffic locations.
- This creates direct competition within the franchisee's primary market area and can significantly impact sales.
Potential Mitigations:
- Carefully review Attachment A of the FDD for a complete list of Closed Markets and their locations within the target area.
- Assess the potential impact of Closed Market competition on projected revenue.
- Consider alternative locations if Closed Market competition is deemed too high.
FDD Citations:
- Item 12: "Carved out from protection in the Protected Area will be any venues that we consider ‘Closed Markets’…"
- Item 12: "…we reserve to ourselves all other rights, including the right (b) to operate Clean Juice Stores and license the use of the Marks and System in “Closed Markets” within the Protected Area…"
Regulatory & Compliance Risks
5 risks identified
1
3
1
Lack of Transparency and Verification of Pre-Acquisition Corporate Store Data
High
Explanation:
- The FDD states that the information regarding corporate stores was obtained from the predecessor's FDD and has not been independently verified. This lack of verification creates a significant risk as the data's accuracy is uncertain and could impact financial projections and understanding of the brand's historical performance.
- The FDD mentions a lack of reliable information about corporate stores between December 31, 2023, and May 19, 2024, creating an information gap that could hide potential issues or misrepresent the brand's stability.
Potential Mitigations:
- Request audited financial statements from the predecessor company to independently verify the provided information.
- Engage a third-party financial analyst to review the available data and assess the potential impact of the missing information.
- Seek legal counsel to understand the implications of relying on unverified data and negotiate stronger protections in the franchise agreement.
FDD Citations:
- Item 1: "No reliable information is available from our predecessor about corporate stores as of December 31, 2023 through May 19, 2024. We have not independently verified this information."
- Table 5: Data on projected openings, referencing information obtained from the predecessor's FDD.
Limited Growth Potential Due to Recent Acquisition
Medium
Explanation:
- The recent acquisition in May 2024 introduces uncertainty about the brand's future direction and growth strategy. The limited projected new franchised outlets (4) in the next fiscal year, as shown in Table 5, suggests a potentially slow growth trajectory.
Potential Mitigations:
- Discuss the franchisor's long-term growth plans and expansion strategy in detail. Request specific market analysis and projections for your target territory.
- Analyze the competitive landscape and assess the brand's potential for market share growth in your area.
FDD Citations:
- Item 1: Disclosure of the acquisition in May 2024.
- Table 5: "Projected New Franchised Outlets in Next Fiscal Year" shows only 4 new outlets planned.
Potential Communication Restrictions for Franchisees
Medium
Explanation:
- The FDD mentions that some franchisees sign agreements restricting their ability to speak openly about their experiences. This can limit your ability to gather unbiased information from existing and former franchisees, hindering your due diligence process.
- The lack of franchisee organizations further restricts communication and potential support networks.
Potential Mitigations:
- Consult with a franchise attorney to understand the implications of these restrictions and how they might affect your rights.
- Network with franchisees outside of official channels, if possible, to gather diverse perspectives.
- Focus on objective data and financial performance indicators during your due diligence.
FDD Citations:
- Item 20 (implied): Discussion of franchisee contact information and communication restrictions.
- Exhibit F: List of franchisees, potentially subject to communication restrictions.
Disclosure of Franchisee Contact Information Upon Leaving the System
Low
Explanation:
- The FDD states that your contact information may be disclosed to other buyers when you leave the franchise system. This could lead to unwanted solicitations or privacy concerns.
Potential Mitigations:
- Discuss this policy with the franchisor and understand the specific circumstances under which your information would be shared.
- Consult with a legal professional to understand your privacy rights and potential recourse if your information is misused.
FDD Citations:
- Item 20 (implied): "If you buy this franchise, your contact information may be disclosed to other buyers when you leave the franchise system."
Potential for Incomplete Information in Exhibit F
Medium
Explanation:
- The FDD mentions that Exhibit F includes franchisees who have not communicated with the franchisor within 10 weeks. This could mean the list is incomplete and doesn't accurately reflect the current state of the franchise system, potentially hiding issues like high turnover or franchisee dissatisfaction.
Potential Mitigations:
- Inquire about the reasons for lack of communication with these franchisees and the potential implications for the system's stability.
- Seek independent verification of the franchisee list and contact as many current and former franchisees as possible to gather a comprehensive understanding of their experiences.
FDD Citations:
- Item 20 (implied) and Exhibit F: Reference to franchisees who have not communicated within 10 weeks.
Franchisor Support Risks
3 risks identified
1
2
Limited Initial Training
Medium
Explanation:
- The FDD states that only two individuals will be admitted to the initial training program for the first store. This may be insufficient for complex operations, especially for franchisees with larger teams or multiple roles requiring training.
- Limited initial training can lead to operational inefficiencies, inconsistent product quality, and poor customer service, ultimately impacting profitability.
Potential Mitigations:
- Negotiate with the franchisor for additional training slots or explore options for online training modules to supplement the initial program.
- Develop a robust internal training program to cover any gaps in the franchisor's training and ensure consistent execution across the team.
- Consider hiring experienced staff in key operational roles to mitigate the risk of inadequate initial training.
FDD Citations:
- Item 11: "With respect to the first Store you develop, we will admit up to two individuals to our initial training program."
Limited and Potentially Costly Opening Support
Medium
Explanation:
- While the franchisor provides five days of opening assistance for the first store, this may be insufficient for a smooth launch, especially for franchisees new to the industry.
- Additional support is available but comes at a significant cost of $1,500 per day plus expenses, potentially straining the initial budget.
Potential Mitigations:
- Carefully plan the pre-opening phase to maximize the benefit of the five days of provided assistance.
- Develop a detailed checklist of tasks to be completed during the opening phase and ensure adequate staffing to minimize the need for additional paid support.
- Negotiate a fixed fee for extended opening support or explore alternative support options from industry consultants.
FDD Citations:
- Item 11: "With respect to the first Store that you develop, we will make available one individual to provide you five days of Store opening assistance..."
- Item 11: "...at your request, we will provide additional Store opening assistance... at a cost of $1,500 per day plus reimbursement..."
Dependence on Franchisor's \
High
Explanation:
- The FDD frequently uses the phrase "as we deem appropriate" regarding ongoing consultation and advice. This lack of specific commitments creates uncertainty about the level and quality of support franchisees can expect.
- The franchisor's subjective judgment could lead to inconsistent support across franchisees and potentially disadvantage some locations.
Potential Mitigations:
- Seek clarification from the franchisor during the due diligence process about the specific types of support offered and the criteria for determining appropriateness.
- Connect with existing franchisees to understand their experience with the level and quality of ongoing support.
- Negotiate for more specific support commitments in the franchise agreement to reduce reliance on the franchisor's discretion.
FDD Citations:
- Item 11: "We will provide such pre-opening consultation and advice as we deem appropriate..."
- Item 11: "We will provide such on-going consultation and advice as we deem appropriate..."
Exit & Transfer Risks
7 risks identified
2
3
2
Limited Transfer Rights & Franchisor Approval
High
Explanation:
- The Franchise Agreement places significant restrictions on the franchisee's ability to transfer the franchise. The franchisor's consent is required, and they can withhold consent for various reasons, potentially limiting your exit options.
- Different transfer scenarios (Convenience of Ownership, Non-controlling Interest, Transfer of Agreement) have varying fees, adding complexity and potential cost burdens during an exit.
- The agreement mentions an "Extended Term Fee" for transfers but doesn't define it, creating uncertainty about potential costs.
Potential Mitigations:
- Carefully review Section 12 of the Franchise Agreement to fully understand all transfer restrictions and associated costs.
- Negotiate with the franchisor upfront for clearer transfer terms and potentially greater flexibility.
- Consult with a franchise attorney to understand your rights and options regarding transfers.
FDD Citations:
- Exhibit A, Franchise Agreement Summary Pages: Transfer Fees listed and referenced to Section 12.
- Exhibit A, Franchise Agreement, Section 12: Details on transfer restrictions and requirements.
- Exhibit A, Franchise Agreement, Section 12.4.7: Reference to "Extended Term Fee."
Renewal Uncertainty & Fees
Medium
Explanation:
- The renewal process and associated fees are not clearly defined in the provided excerpts. While a renewal fee is stated, the criteria for renewal approval and other potential conditions are unclear.
- Uncertainty around renewal can impact long-term planning and the potential resale value of the franchise.
Potential Mitigations:
- Request clarification from the franchisor regarding the renewal process, criteria, and any associated costs beyond the stated renewal fee.
- Negotiate for favorable renewal terms in the initial Franchise Agreement.
- Consult with a franchise attorney to understand your rights and options regarding renewal.
FDD Citations:
- Exhibit A, Franchise Agreement Summary Pages: Renewal Fee listed.
- Exhibit A, Franchise Agreement, Section 2: Term of the agreement and potential renewal mentioned but details lacking.
Short Franchise Term (Especially Non-Traditional)
Medium
Explanation:
- The initial franchise term for Non-Traditional stores is only 5 years (with a maximum of 6 years), significantly shorter than the 10-year term (maximum 11 years) for Traditional stores. This shorter term limits the time to recoup investment and build business value before needing to renegotiate or potentially lose the franchise.
Potential Mitigations:
- Carefully evaluate the financial implications of the shorter term for Non-Traditional stores. Ensure the business plan allows for sufficient return on investment within the initial term.
- Negotiate for a longer initial term or more favorable renewal terms for Non-Traditional stores.
FDD Citations:
- Exhibit A, Franchise Agreement Summary Pages: Franchise term specified for both Traditional and Non-Traditional stores.
Termination Clauses and Obligations
High
Explanation:
- The FDD excerpt references default and termination clauses (Section 13 and 14) but doesn't provide details. These clauses could significantly impact your ability to exit the franchise and may impose financial penalties or ongoing obligations.
Potential Mitigations:
- Thoroughly review Sections 13 and 14 of the Franchise Agreement to understand the grounds for default and termination, as well as any associated obligations or penalties.
- Negotiate with the franchisor to clarify or modify any unfavorable termination clauses.
- Consult with a franchise attorney to assess the risks associated with the termination provisions.
FDD Citations:
- Exhibit A, Franchise Agreement Table of Contents: Reference to Sections 13 (Default and Termination) and 14 (Obligations upon Termination or Expiration).
Wisconsin Fair Dealership Law Superseding Provisions
Low
Explanation:
- For franchisees operating in Wisconsin, the state's Fair Dealership Law overrides any conflicting provisions in the Franchise Agreement. This could create complexities in understanding the actual terms governing the franchise relationship and exit strategies.
Potential Mitigations:
- If operating in Wisconsin, carefully review the Wisconsin Fair Dealership Law and consult with legal counsel specializing in this area to understand how it interacts with the Franchise Agreement.
FDD Citations:
- Item 17: "For franchisees subject to the Wisconsin Fair Dealership Law, Ch. 135, Stats., provisions in the Fair Dealership Law supersede any inconsistent provisions of the Franchise Agreement or a related contract."
Lack of Clarity on Post-Termination Restrictions
Medium
Explanation:
- The FDD excerpt doesn't detail any post-termination restrictions, such as non-compete clauses. Such restrictions could limit your ability to operate a similar business after exiting the franchise.
Potential Mitigations:
- Carefully review the full Franchise Agreement, particularly Sections 14 and 15 (Covenants), for any post-termination restrictions, including non-compete clauses.
- Negotiate with the franchisor to limit the scope or duration of any unreasonable post-termination restrictions.
- Consult with a franchise attorney to understand the implications of any post-termination restrictions.
FDD Citations:
- Exhibit A, Franchise Agreement Table of Contents: Reference to Section 14 (Obligations upon Termination or Expiration) and 15 (Covenants).
Potential for Franchisor Acquisition Impacting Protected Area
Low
Explanation:
- The Franchise Agreement allows Clean Juice to continue operating or franchising acquired businesses within your Protected Area, potentially increasing competition and impacting your business.
Potential Mitigations:
- Assess the likelihood of such an acquisition and its potential impact on your business during your due diligence.
- Consider negotiating for stronger territorial protections in the Franchise Agreement.
FDD Citations:
- Exhibit A, Franchise Agreement, Section 1.2: "if Clean Juice purchases, merges, acquires, or affiliates with another business, Clean Juice may continue to operate, franchise, or license the acquired business anywhere, including in the Protected Area…"
Operational & Brand Risks
3 risks identified
3
Limited Initial Training and Support
Medium
Explanation:
- While the franchisor provides initial training and opening support, it's limited to two individuals for training and five days of on-site assistance for the first store. This may be insufficient for complex operations like a juice bar, especially for franchisees with limited food service experience.
- Additional support is available at a cost, potentially straining the initial budget.
Potential Mitigations:
- Thoroughly assess the adequacy of the initial training and support. Request additional training if needed, even at a cost, to ensure operational proficiency.
- Seek experienced staff to supplement the limited initial support provided by the franchisor.
- Develop a detailed operational plan before opening to minimize reliance on continuous franchisor support.
FDD Citations:
- Item 11: "With respect to the first Store you develop, we will admit up to two individuals to our initial training program."
- Item 11: "With respect to the first Store that you develop, we will make available one individual to provide you five days of Store opening assistance..."
- Item 11: "...at your request, we will provide additional Store opening assistance... at a cost of $1,500 per day plus reimbursement..."
Dependence on Franchisor's Designated Suppliers
Medium
Explanation:
- Franchisees are required to purchase equipment, signs, fixtures, and initial inventory from designated suppliers. This limits flexibility and potentially increases costs due to lack of competitive bidding.
- Dependence on these suppliers creates vulnerability to supply chain disruptions and price increases.
Potential Mitigations:
- Carefully review the pricing and terms offered by designated suppliers. Negotiate where possible.
- Investigate alternative suppliers early on, even if not immediately usable, to understand potential future options.
- Maintain open communication with the franchisor regarding supplier performance and potential issues.
FDD Citations:
- Item 11: "We will supply you with a list of our designated suppliers for your purchase of equipment, signs, fixtures, opening inventory, and supplies."
Brand Development Fund Management and Allocation
Medium
Explanation:
- The franchisor controls the Brand Development Fund and its allocation. While the FDD outlines intended uses, there's a lack of transparency on specific spending and ROI for franchisees.
- The franchisor can reimburse its own administrative costs from the fund, potentially creating a conflict of interest.
Potential Mitigations:
- Request detailed information on past Brand Development Fund expenditures and results.
- Inquire about the process for proposing and approving fund allocations for specific marketing initiatives.
- Actively participate in franchisee advisory councils to voice concerns and influence fund management.
FDD Citations:
- Item 11: "We administer the Fund, and may use Fund monies for authorized purposes, which include..."
- Item 11: "We may also use Fund monies to reimburse ourselves for our costs of personnel and other administrative and overhead costs..."
Performance & ROI Risks
6 risks identified
2
3
1
No Guaranteed ROI
High
Explanation:
- Item 14.10 explicitly states that no representations, warranties, or guarantees are made regarding actual or potential earnings, sales, profits, or the success of the franchisee's store, except for what is disclosed in Item 19 of the FDD. This indicates a significant risk as there's no assurance of profitability or return on investment.
- The franchisee bears the full risk of business failure and potential financial losses.
Potential Mitigations:
- Carefully review Item 19 of the FDD for any financial performance representations. Analyze the data provided, if any, with a financial advisor to understand potential profitability scenarios.
- Develop a comprehensive business plan with realistic financial projections, considering local market conditions and competition.
- Secure sufficient funding to cover initial investment and operating expenses during the ramp-up period, anticipating potential delays in achieving profitability.
FDD Citations:
- Item 14.10: "You agree that no claims, representations, warranties or guarantees...regarding actual or potential earnings, sales, profits or success of your CLEAN JUICE Store have been made to you other than as set forth in Item 19 of the FDD."
Competition from Similar Businesses
High
Explanation:
- The definition of "Competitive Business" in Attachment A highlights the risk of competition from existing and future businesses offering similar products, such as bottled or pressed fruit and vegetable juices, smoothies, and other café menu items. This competition can impact market share, pricing strategies, and overall profitability.
Potential Mitigations:
- Conduct thorough market research to assess the existing competitive landscape in the chosen territory. Identify competitors' strengths and weaknesses to develop a differentiated offering.
- Focus on building a strong brand identity and customer loyalty through excellent service, high-quality products, and targeted marketing efforts.
- Explore opportunities for local partnerships and community engagement to establish a strong presence and attract customers.
FDD Citations:
- Attachment A: "'Competitive Business' means a retail business that specializes in the sale of bottled or pressed fruit and vegetable juices, smoothies, and other similar café menu items..."
Dependence on Franchisor's Brand and System
Medium
Explanation:
- As a franchisee, your business success is heavily reliant on the franchisor's brand reputation, operating system, and ongoing support. Any negative publicity or changes in the franchisor's business practices can directly impact your business.
Potential Mitigations:
- Thoroughly research the franchisor's history, reputation, and financial stability before signing the agreement.
- Actively participate in franchisee associations and communicate with other franchisees to stay informed about any issues or concerns.
- Diversify marketing efforts to build local brand recognition in addition to relying on the national brand.
FDD Citations:
- Implied throughout the FDD, particularly in sections related to brand usage, operating manuals, and ongoing support.
No Affiliate Liability
Medium
Explanation:
- Item 14.11 states that no affiliate of Clean Juice will have any liability for the franchisor's obligations or any claims arising from the agreement. This limits the recourse available to the franchisee in case of disputes or breaches of contract by related entities.
Potential Mitigations:
- Carefully review the FDD and the franchise agreement to understand the legal structure and relationships between the franchisor and its affiliates.
- Consult with legal counsel to assess the potential implications of the no-affiliate liability clause and explore options for protecting your interests.
FDD Citations:
- Item 14.11: "No past, present or future director, officer, employee...of Clean Juice or of any of our Affiliates, will have any liability for (i) any obligations or liabilities Clean Juice has relating to or arising from this Agreement, or (ii) any claim against Clean Juice..."
Adherence to Franchise Agreement Terms
Medium
Explanation:
- The franchise agreement dictates the terms and conditions of the business relationship, and the franchisee is obligated to adhere to these terms. Failure to comply can result in penalties, termination of the agreement, and financial losses.
- Item 14.10 emphasizes the importance of the written agreement and disavows any oral representations.
Potential Mitigations:
- Thoroughly review and understand all aspects of the franchise agreement before signing. Seek legal counsel to clarify any ambiguities or concerns.
- Maintain open communication with the franchisor and address any questions or issues promptly.
- Establish internal processes to ensure compliance with all franchise agreement requirements.
FDD Citations:
- Item 14.10: "You and we acknowledge that we want all terms of our business relationship to be defined in this written agreement..."
Exclusion of Closed Markets
Low
Explanation:
- Attachment B specifies that the Store Development Area excludes "Closed Markets," such as shopping malls, airports, and other venues where food and beverage service rights are contracted to third parties. This limits potential revenue opportunities for the franchisee.
Potential Mitigations:
- Carefully review the definition of "Closed Markets" in Attachment B to understand the specific exclusions in your territory.
- Focus on maximizing sales within the permitted areas and explore alternative revenue streams, such as catering or delivery services, if allowed by the franchise agreement.
FDD Citations:
- Attachment B: "...but excludes all Closed Markets located within such area. A 'Closed Market' is any facility serving a captive market, including..."
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FDD Year: 2025
Uploaded: 8/25/2025
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