Discovery Map
Hospitality
Founded 2005118 locationsCompany Profile
Year Founded:2005
Discovery Map Franchise Cost
| Franchise Fee: | $25,000Key Metric |
| Total Investment: | $29,000 - $36,000Key Metric |
| Liquid Capital: | $7,500 |
| Royalty Fee: | 10% of gross sales |
| Marketing Fee: | 1% of gross sales |
Quick ROI Calculator
Based on Discovery Map's actual financial data
Outlet Counts by Year
Historical outlet data extracted from FDD documents
Total US Locations:118
Scale relative to 1,000 locations
Franchised Units:118
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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
25% of total
25
Medium Risk
Monitor closely
57% of total
8
Low Risk
Manageable items
18% of total
44
Total Items
Factors analyzed
10 categories
5.34
Overall Score
Low RiskHigh Risk
010
Franchisor Stability Risks
6 risks identified
1
3
2
Limited Operating History Under Current Structure
Medium
Explanation:
- Discovery Map International, Inc. has operated under its current name and structure only since 2011, following several acquisitions and name changes. While the predecessor company began offering franchises in 1993, the current entity's shorter history under this specific structure may present some uncertainty regarding its long-term stability and strategic direction.
Potential Mitigations:
- Carefully review the franchisor's financial performance since 2011, paying close attention to revenue trends, profitability, and any significant changes in business strategy.
- Inquire about the integration process following the acquisitions and any challenges encountered. Assess the franchisor's ability to successfully manage and support a growing franchise network.
- Speak with existing franchisees about their experiences with the franchisor, particularly those who have been with the system since before and after the 2011 restructuring.
FDD Citations:
- Item 1: "We are a Vermont corporation, incorporated on October 18, 2005...On November 1, 2011 RMFI acquired substantially all the assets of Starr Map Company, LLC, and Discovery Map International, LLC...The year 1993 was the year of the first offer of franchises by our predecessor..."
Dependence on Tourism and Advertising Spending
Medium
Explanation:
- Discovery Map's business model relies heavily on the tourism industry and the willingness of local businesses to spend on advertising. Economic downturns, changes in travel patterns, or increased competition in the advertising market could negatively impact franchisee revenues.
Potential Mitigations:
- Thoroughly research the local tourism market in your target area, including historical trends, seasonality, and potential future developments.
- Analyze the competitive landscape for advertising in your area, considering alternative media options available to local businesses.
- Develop a robust marketing plan to attract advertisers and demonstrate the value proposition of Discovery Map.
FDD Citations:
- Item 1: "The primary user of DISCOVERY MAP® is the general public. The target market for the services and products provided by DISCOVERY MAP® is the purchaser of business advertising which typically includes restaurants, resorts, retail stores, local attractions and other businesses in the community."
Competition in the Advertising Market
Medium
Explanation:
- The FDD acknowledges competition from "local, regional and national similar advertising-based media." This competition could make it challenging to attract and retain advertisers, potentially impacting franchisee profitability.
Potential Mitigations:
- Develop a clear understanding of the competitive landscape in your target market, including the pricing, services, and reach of other advertising platforms.
- Differentiate Discovery Map by highlighting its unique features, such as its targeted audience, visual appeal, and multi-media approach.
- Build strong relationships with local businesses and demonstrate the value of advertising with Discovery Map.
FDD Citations:
- Item 1: "Your competitors will include local, regional and national similar advertising-based media."
Relatively Small Franchise System
Low
Explanation:
- With approximately 119 franchises, Discovery Map is a relatively small franchise system. This could limit the resources available for franchisee support, marketing, and technology development.
Potential Mitigations:
- Carefully evaluate the franchisor's support infrastructure and resources, including training programs, marketing materials, and technology platforms.
- Speak with existing franchisees about the level of support they receive from the franchisor.
- Assess your own ability to operate independently and contribute to the growth of the franchise system.
FDD Citations:
- Item 1: "As of the end of our last fiscal year we had 121 franchises."
- Item 20: Table 1 shows a consistent franchise count around 119.
Franchisee Turnover
Low
Explanation:
- Item 20, Table 2 and 3, shows a number of franchise transfers, terminations, and non-renewals. While the specific reasons are not provided, a significant level of franchisee turnover could indicate underlying challenges within the system.
Potential Mitigations:
- Analyze the franchisee turnover data in detail, paying attention to trends over time and any specific states or regions with higher turnover rates.
- Speak with current and former franchisees to understand their reasons for leaving the system.
- Carefully evaluate the franchisor's support programs and resources to assess their effectiveness in helping franchisees succeed.
FDD Citations:
- Item 20: Tables 2 and 3 provide data on franchise transfers, terminations, and non-renewals.
Newly Formed Affiliate's Untested Performance
High
Explanation:
- The franchisor's affiliate, Discovery Digital Services, Inc. (DDS), was incorporated in May 2024, the same year as the FDD. DDS is responsible for developing digital and technological services for the franchisor and franchisees. Its very recent formation and lack of operating history create significant uncertainty about its ability to deliver effective and reliable services, which are crucial in today's digital landscape.
Potential Mitigations:
- Request detailed information about DDS's management team, technology infrastructure, and development roadmap.
- Inquire about the franchisor's contingency plans if DDS fails to deliver on its promises.
- Seek clarification on the contractual arrangements between the franchisor and DDS, including service level agreements and performance guarantees.
FDD Citations:
- Item 1: "We have an affiliate, Discovery Digital Services, Inc. (“DDS”), a Vermont corporation, incorporated on May 1, 2024...DDS is in the business of developing digital and technological services for use by us and our franchisees."
Disclosure & Representation Risks
3 risks identified
3
Reliance on Digital Publication Fees
Medium
Explanation:
- Discovery Map's revenue relies partly on digital publication fees tied to web-based services and advertising software. This dependence creates a vulnerability to technological shifts, competitor innovations, and changing franchisee preferences.
- If franchisees find these services less valuable or alternative solutions emerge, Discovery Map's revenue stream could be negatively impacted.
Potential Mitigations:
- Continuously innovate and improve digital offerings to maintain value for franchisees.
- Explore diversified revenue streams beyond digital publication fees.
- Regularly assess franchisee satisfaction with digital services and adapt accordingly.
FDD Citations:
- Notes to Financial Statements: "Digital publication fees are annual fees related to web-based services provided for franchisees…"
Concentrated Revenue Streams
Medium
Explanation:
- The FDD indicates revenue dependence on initial franchise fees, renewals, and digital publication fees. This concentration poses a risk if any of these streams are disrupted.
- Over-reliance on a few revenue sources makes the business vulnerable to market fluctuations and changes in franchisee behavior.
Potential Mitigations:
- Develop additional revenue streams, such as product sales or new service offerings.
- Explore strategic partnerships to expand market reach and revenue opportunities.
- Implement robust financial planning to manage potential fluctuations in core revenue streams.
FDD Citations:
- Notes to Financial Statements: Discussion of initial franchise fees, renewals, and digital publication fees.
Limited Operating History with Current Business Model
Medium
Explanation:
- While founded in 2005, the FDD doesn't explicitly detail the history of the *current* business model. Changes in strategy, technology, or market conditions could impact the relevance of past performance.
- Lack of clear historical data on the current model makes it harder to project future success.
Potential Mitigations:
- Request clarification from the franchisor regarding the timeline and performance of the current business model.
- Conduct thorough market research to assess the viability and sustainability of the model.
- Consult with experienced franchise consultants to evaluate the risks and opportunities.
FDD Citations:
- General FDD content: Review for details on the evolution of the business model.
Financial & Fee Risks
3 risks identified
1
2
Non-Refundable Initial Franchise Fee
High
Explanation:
- The $25,000 initial franchise fee is non-refundable, even if the franchisor fails to meet its pre-opening obligations or if the franchisee is unable to operate successfully.
- This creates a significant financial risk for the franchisee, as they lose a substantial investment if the relationship terminates prematurely.
Potential Mitigations:
- Negotiate with the franchisor for a partial refund clause under specific circumstances, such as franchisor default.
- Thoroughly review the franchisor's pre-opening obligations and ensure they are clearly defined and achievable.
- Consult with a franchise attorney to understand the implications of the non-refundable fee and explore legal options.
FDD Citations:
- Item 5: "All franchisees pay an Initial Franchise Fee of $25,000…"
- Addendum: "Franchisee shall pay…an Initial Franchise Fee of TWENTY-FIVE THOUSAND DOLLARS ($25,000.00). Such Initial Franchise Fee shall be deferred… The Initial Franchise Fee is non-refundable."
Variable Advertising Fund Benefits
Medium
Explanation:
- While franchisees contribute to a national advertising fund, the FDD states that expenditures in a specific territory may not be proportionate to the franchisee's contribution.
- This could lead to a situation where a franchisee invests in advertising that primarily benefits other territories.
Potential Mitigations:
- Request clarification from the franchisor on how advertising funds are allocated and how decisions regarding media placement are made.
- Inquire about the advertising council's operating rules and guidelines and the franchisee's level of influence within the council.
- Assess the effectiveness of national advertising campaigns in comparison to local marketing efforts.
FDD Citations:
- Addendum: "This does not mean, however, that expenditures in your Territory will be equivalent or proportionate to your contribution."
Mandatory System Updates with Unlimited Costs
Medium
Explanation:
- The franchisor reserves the right to require franchisees to update or upgrade their computer hardware, software, and network connectivity at their own expense.
- The FDD states there are "no limitations on the cost and frequency" of these updates, posing a potential financial burden.
Potential Mitigations:
- Negotiate with the franchisor to establish reasonable limits on the cost and frequency of mandatory updates.
- Request a clear schedule or roadmap for anticipated system updates to allow for budgeting and planning.
- Explore alternative technology solutions that may offer greater cost control and flexibility.
FDD Citations:
- Item 11: "We reserve the right to require you, at your expense and in the time frame determined by us, to update or upgrade the hardware, software and/or network connectivity… There are no limitations on the cost and frequency…"
Legal & Contract Risks
7 risks identified
2
3
2
Inconsistency between FDD and Wisconsin Fair Dealership Law
High
Explanation:
- The FDD repeatedly states that provisions related to renewal, termination, and inventory repurchase in the Franchise Agreement are superseded by the Wisconsin Fair Dealership Law if inconsistencies exist. This creates ambiguity and potential conflict between the contractual terms and state law.
- Franchisees in Wisconsin operate under different terms than those in other states, leading to potential confusion and legal disputes.
- The repeated references to inconsistencies suggest a lack of careful alignment between the Franchise Agreement and Wisconsin law, raising concerns about the overall legal soundness of the agreement.
Potential Mitigations:
- Carefully review the Wisconsin Fair Dealership Law and compare it to the Franchise Agreement to fully understand the differences and their implications.
- Seek legal counsel specializing in Wisconsin franchise law to clarify any ambiguities and ensure compliance.
- Request a revised Franchise Agreement specifically tailored to Wisconsin law to eliminate inconsistencies and potential conflicts.
FDD Citations:
- Item 17: Entire section discussing amendments related to Wisconsin Fair Dealership Law.
- Item 22: Reference to Exhibit C containing the Franchise Agreement.
- Exhibit C: Franchise Agreement and related amendments.
Enforceability of Non-Compete Agreements in Wisconsin
Medium
Explanation:
- The FDD mentions that non-compete covenants are enforceable in Wisconsin only under certain conditions, but doesn't specify those conditions. This lack of clarity creates uncertainty about the enforceability of post-termination restrictions on franchisees.
- Franchisees may be unaware of the specific limitations on non-compete agreements in Wisconsin, potentially jeopardizing their future business opportunities.
Potential Mitigations:
- Obtain legal advice to understand the specific conditions under which non-compete agreements are enforceable in Wisconsin.
- Request clarification from the franchisor regarding the scope and enforceability of the non-compete clause in the Franchise Agreement.
- Negotiate the terms of the non-compete agreement to ensure they are reasonable and comply with Wisconsin law.
FDD Citations:
- Item 17: "Covenants not to compete during the term of and upon termination or expiration of a Franchise Agreement are enforceable only under certain conditions according to Wisconsin Law."
Pending Registrations in Multiple States
Medium
Explanation:
- The FDD lists several states, including California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, Virginia, and Washington, where the FDD registration is pending. This suggests potential delays or complications in operating in these states.
- The franchisor's ability to support franchisees in states with pending registrations may be limited.
Potential Mitigations:
- Inquire about the status of registrations in the target state and the expected timeline for completion.
- Assess the franchisor's ability to provide support and resources in states with pending registrations.
- Consider delaying expansion into states with pending registrations until the process is complete.
FDD Citations:
- State Effective Dates section: List of states with "Pending" effective dates.
Lack of Specificity Regarding "Other State Laws"
Low
Explanation:
- The FDD mentions that "other states may require registration, filing, or exemption of a franchise under other laws, such as those that regulate the offer and sale of business opportunities or sell-assisted marketing plans." This vague statement creates uncertainty about potential legal requirements in unspecified states.
Potential Mitigations:
- Research the specific franchise and business opportunity laws in the target state.
- Consult with legal counsel to ensure compliance with all applicable state regulations.
FDD Citations:
- State Effective Dates section: "Other states may require registration…"
Variations in Disclosure Document Delivery Requirements
Low
Explanation:
- The FDD highlights different delivery timelines for the disclosure document in various states (e.g., 14 calendar days, 10 business days, first personal meeting). This variation can create confusion and potential compliance issues.
Potential Mitigations:
- Confirm the specific delivery requirements for the target state.
- Maintain documented proof of delivery to demonstrate compliance.
FDD Citations:
- Exhibit F Receipt: References to specific state requirements for delivery timing.
Wisconsin Fair Dealership Law Superseding Termination Provisions
High
Explanation:
- The FDD and the Amendment to the Franchise Agreement specifically address the Wisconsin Fair Dealership Law's impact on termination provisions. This highlights the potential for significant differences in termination rights for Wisconsin franchisees compared to those in other states. This can create complexity and potentially favor the franchisee in Wisconsin, making it harder for the franchisor to terminate for cause.
Potential Mitigations:
- Carefully review the Wisconsin Fair Dealership Law and its implications for termination. Understand the specific grounds for termination and the process involved.
- Consult with legal counsel specializing in Wisconsin franchise law to understand the potential risks and benefits.
FDD Citations:
- Item 17: References to Wisconsin Fair Dealership Law impacting termination provisions.
- Amendment to Discovery Map International, Inc. Franchise Agreement Required by the State of Wisconsin: Specific language regarding termination rights under Wisconsin law.
Potential for Disputes Related to Wisconsin Fair Dealership Law Interpretation
Medium
Explanation:
- The repeated emphasis on the Wisconsin Fair Dealership Law overriding the Franchise Agreement creates a potential for disputes regarding the interpretation and application of the law. Ambiguity in how the law interacts with the agreement can lead to costly legal battles.
Potential Mitigations:
- Seek expert legal advice on the Wisconsin Fair Dealership Law and its interaction with the Franchise Agreement.
- Engage in open communication with the franchisor to clarify any uncertainties and address potential conflicts proactively.
- Consider adding specific language to the Franchise Agreement that clarifies the interplay between the agreement and the Wisconsin Fair Dealership Law, reducing the potential for ambiguity.
FDD Citations:
- Item 17: References to Wisconsin Fair Dealership Law impacting various provisions.
- Amendment to Discovery Map International, Inc. Franchise Agreement Required by the State of Wisconsin: General language regarding the application of Wisconsin law.
Territory & Competition Risks
5 risks identified
1
3
1
Competition from Established Advertising Media
High
Explanation:
- The FDD states that competitors include "local, regional and national similar advertising-based media." This indicates a highly competitive landscape with established players, potentially posing a significant challenge for a new franchisee.
- The broad range of competitors, from local newspapers to national digital platforms, suggests that franchisees will need to differentiate themselves effectively to attract advertising revenue.
Potential Mitigations:
- Develop a strong local marketing strategy to build relationships with potential advertisers and demonstrate the unique value proposition of Discovery Map.
- Leverage the brand recognition and support provided by the franchisor to gain a competitive edge.
- Focus on niche markets or specific advertiser segments to minimize direct competition with larger players.
- Continuously innovate and adapt to the changing advertising landscape by exploring new technologies and platforms.
FDD Citations:
- Item 1: "Your competitors will include local, regional and national similar advertising-based media."
Dependence on Tourism-Based Businesses
Medium
Explanation:
- The FDD identifies the target market as "purchaser of business advertising which typically includes restaurants, resorts, retail stores, local attractions and other tourist-based businesses." This heavy reliance on the tourism industry makes the franchise vulnerable to fluctuations in tourism, economic downturns, and seasonal variations.
Potential Mitigations:
- Diversify the advertiser base by targeting businesses that cater to both tourists and local residents.
- Develop marketing strategies that address seasonal variations in tourism and promote year-round advertising opportunities.
- Explore partnerships with local organizations and businesses to expand reach and reduce dependence on tourism alone.
FDD Citations:
- Item 1: "The target market for the services and products provided by DISCOVERY MAP® is the purchaser of business advertising which typically includes restaurants, resorts, retail stores, local attractions and other tourist-based businesses."
Limited Exclusivity
Medium
Explanation:
- The FDD mentions "limitations in the Franchise Agreement on advertising and soliciting business outside of your Area of Exclusive Rights (see Item 12)." While not fully detailed in the provided excerpt, this suggests potential competition from other Discovery Map franchisees or even the franchisor itself, depending on how these limitations are defined.
Potential Mitigations:
- Carefully review Item 12 of the FDD to fully understand the limitations on exclusivity and the potential for competition from other franchisees.
- Develop a strong local presence and build relationships within the designated territory to maximize market share.
- Communicate with the franchisor to clarify any ambiguities regarding territorial rights and competition.
FDD Citations:
- Introduction: "Except for the limitations in the Franchise Agreement on advertising and soliciting business outside of your Area of Exclusive Rights (see Item 12)..."
Brand Name Variation in Washington State
Low
Explanation:
- The FDD notes an exception for Washington State, where franchisees operate under the name "DESTINATION MAP" instead of "DISCOVERY MAP®. This could lead to brand confusion and dilute the overall brand recognition, particularly for customers who travel between states.
Potential Mitigations:
- If operating in Washington, emphasize the connection to the Discovery Map brand in marketing materials and communications.
- Leverage any cross-promotional opportunities with Discovery Map franchisees in other states.
FDD Citations:
- Item 1: "There is one exception: In the State of Washington, you will operate a DISCOVERY MAP® Franchised Business under solely the name DESTINATION MAP."
Reliance on Franchisor's Digital Services Affiliate
Medium
Explanation:
- The FDD mentions an affiliate, Discovery Digital Services, Inc. (DDS), responsible for developing digital and technological services for franchisees. This creates a dependence on DDS, and any issues with DDS's performance, pricing, or stability could directly impact franchisees.
- As DDS is a new entity (incorporated May 1, 2024), its long-term viability and ability to deliver effective services are yet to be proven.
Potential Mitigations:
- Carefully review the agreements and terms of service related to DDS and understand the associated costs and potential risks.
- Inquire about DDS's development roadmap and contingency plans in case of service disruptions.
- Explore alternative digital service providers as a backup option.
FDD Citations:
- Item 1: "We have an affiliate, Discovery Digital Services, Inc. (“DDS”), a Vermont corporation, incorporated on May 1, 2024... DDS is in the business of developing digital and technological services for use by us and our franchisees."
Regulatory & Compliance Risks
6 risks identified
1
3
2
Lack of Industry-Specific Regulations Oversight
Medium
Explanation:
- The FDD states, "There are no regulations specific to our industry that will affect operation of your unit, other than those laws and regulations that may apply to businesses in general." While this might seem like less bureaucratic burden, it also means less established legal frameworks and potentially inconsistent enforcement of general business laws as they apply to this niche industry. This can lead to uncertainty and difficulty in navigating legal challenges.
- Absence of specific regulations can also result in a lack of standardized practices, potentially leading to inconsistent quality and consumer protection issues within the industry.
Potential Mitigations:
- Thoroughly research general business regulations at the local, state, and federal levels to ensure full compliance.
- Consult with a legal expert specializing in franchises and advertising to understand how general laws apply to the Discovery Map business model.
- Engage with industry associations or other franchisees to share best practices and develop self-regulatory standards.
FDD Citations:
- Item 1: "There are no regulations specific to our industry that will affect operation of your unit, other than those laws and regulations that may apply to businesses in general."
Dependence on Franchisor's Digital Services Affiliate
Medium
Explanation:
- The FDD mentions an affiliate, Discovery Digital Services, Inc. (DDS), responsible for developing digital and technological services. This creates a dependence on DDS, which could pose risks if DDS fails to deliver, increases prices, or experiences other operational issues. This dependence limits franchisee flexibility and control over their digital presence.
Potential Mitigations:
- Carefully review the agreement with DDS regarding service levels, pricing, and terms. Negotiate favorable terms and ensure clear performance expectations.
- Explore alternative digital service providers as backup options in case of issues with DDS.
- Understand the long-term strategy of DDS and its alignment with the franchisee's business goals.
FDD Citations:
- Item 1: "We have an affiliate, Discovery Digital Services, Inc. ("DDS"), a Vermont corporation... DDS is in the business of developing digital and technological services for use by us and our franchisees."
Mandatory Use of Approved Suppliers
Medium
Explanation:
- The FDD states that franchisees "must acquire fixtures, design and printing services from approved suppliers or us." This limits franchisees' ability to negotiate better pricing or choose suppliers based on quality, service, or other preferences. It can also create a potential conflict of interest if the franchisor profits from these mandated suppliers.
Potential Mitigations:
- Request a complete list of approved suppliers and their pricing structures before signing the franchise agreement.
- Compare pricing and services offered by approved suppliers with other potential vendors to assess competitiveness.
- Inquire about the franchisor's relationship with approved suppliers and any potential conflicts of interest.
FDD Citations:
- Item 11: "You must acquire fixtures, design and printing services from approved suppliers or us."
Limited Control Over Map Design and Content
Low
Explanation:
- While the FDD mentions providing specifications for map design, the level of franchisee control over content and customization is unclear. Excessive franchisor control could limit the franchisee's ability to cater to local market needs and preferences.
Potential Mitigations:
- Clarify the extent of franchisee input and control over map content, design, and features during the due diligence process.
- Negotiate for greater flexibility in adapting the map to local market conditions.
- Review samples of existing maps to assess the level of standardization and potential for customization.
FDD Citations:
- Item 11: "Provide you with specifications for map design, appearance and distribution."
Reliance on Franchisor for Map Redrawing Every Seven Years
Low
Explanation:
- The requirement to pay the franchisor or its designee for map redrawing every seven years creates a recurring cost and dependence on the franchisor. This could lead to unpredictable expenses and potential disagreements over pricing or design.
Potential Mitigations:
- Negotiate a clear and predictable pricing structure for map redrawing services in the franchise agreement.
- Explore the possibility of using alternative providers for redrawing services, if allowed.
- Understand the process and timeline for map redrawing to minimize disruption to business operations.
FDD Citations:
- Item 11: "...you must pay us or our designee, at the then-current rate for map layout and map assembly services, to update and redraw the Franchised Business map every seven years..."
Complex Corporate History and Potential for Legacy Issues
High
Explanation:
- The FDD describes a complex history involving multiple acquisitions, name changes, and predecessors. This raises concerns about potential unresolved legal or financial obligations from previous entities, which could impact the current franchise system.
- The acquisition of assets and intellectual property from predecessors creates a risk of unclear ownership or potential disputes regarding intellectual property rights.
Potential Mitigations:
- Conduct thorough due diligence to investigate the legal and financial history of the franchisor and its predecessors.
- Consult with a legal expert to review the franchise agreement and assess any potential risks related to the franchisor's corporate history.
- Seek clarification on the ownership and usage rights of all intellectual property included in the franchise system.
FDD Citations:
- Item 1: Details about acquisitions, name changes, and predecessors, including Resort Maps Acquisition Corporation, Murphy Holdings, Inc., Starr Map Company, LLC, and Discovery Map International, LLC.
Franchisor Support Risks
3 risks identified
1
2
Limited Initial Training and Ongoing Support
Medium
Explanation:
- Initial training is limited to up to four days, which may be insufficient to cover all aspects of running the business, especially for franchisees with limited prior experience in advertising sales, map production, and distribution.
- While ongoing support is mentioned, the specifics are vague, potentially leaving franchisees without adequate assistance when facing operational challenges.
- The FDD mentions "general assistance" and guidance "to the extent we deem it necessary or advisable," which lacks concrete commitments and could result in inconsistent support levels.
Potential Mitigations:
- Thoroughly review the training program outline and operations manual before signing the franchise agreement to assess the adequacy of training and support.
- Request clarification on the specific types of ongoing support provided, including response times, availability of expert advice, and resources for troubleshooting common issues.
- Connect with existing franchisees to gauge their satisfaction with the level of support received from the franchisor.
FDD Citations:
- Item 11: Training program details.
- Item 12: Description of ongoing support.
Dependence on Franchisor's Technology and Platform
High
Explanation:
- Franchisees are required to use the franchisor's website and digital tools for online advertising sales, creating a significant dependence on the franchisor's technology infrastructure.
- Any downtime, technical issues, or changes to the platform could directly impact the franchisee's ability to generate revenue from online advertising.
- The FDD doesn't provide details about the reliability, security, and scalability of the franchisor's technology platform.
Potential Mitigations:
- Inquire about the franchisor's technology infrastructure, including uptime guarantees, security measures, and disaster recovery plans.
- Request access to the franchisor's website and digital tools for a thorough evaluation before signing the agreement.
- Seek legal advice to understand the terms and conditions related to the use of the franchisor's technology platform and potential liabilities in case of technical failures.
FDD Citations:
- Item 9: Franchise Agreement sections related to online advertising and website usage.
- Item 12: Description of online support and web ad program.
Mandatory Seven-Year Map Redrawing
Medium
Explanation:
- Franchisees are obligated to pay for map redrawing every seven years, which represents a significant recurring cost that could impact profitability.
- The FDD doesn't specify the cost of this service, creating uncertainty about the financial burden on franchisees.
- This mandatory redrawing could limit flexibility in adapting to market changes or updating map content more frequently.
Potential Mitigations:
- Request a clear estimate of the map redrawing costs and negotiate a fixed price or a cap on potential increases.
- Explore alternative map production options and assess the feasibility of using third-party providers if allowed by the franchise agreement.
- Factor in the recurring redrawing costs when developing financial projections and evaluating the overall investment.
FDD Citations:
- Item 12: "...you must pay us or our designee, at the then-current rate for map layout and map assembly services, to update and redraw the Franchised Business map every seven years..."
Exit & Transfer Risks
5 risks identified
1
3
1
Inconsistency with Wisconsin Fair Dealership Law
High
Explanation:
- The FDD repeatedly mentions inconsistencies between the Franchise Agreement and the Wisconsin Fair Dealership Law regarding renewal, termination, and inventory repurchase. This creates significant uncertainty and potential legal challenges for franchisees operating in Wisconsin.
- The reliance on the Wisconsin Fair Dealership Law overriding the Franchise Agreement creates complexity and potential for disputes over interpretation and application.
- The FDD doesn't clearly articulate the specific differences, leaving franchisees vulnerable to unforeseen consequences.
Potential Mitigations:
- Carefully review the Wisconsin Fair Dealership Law and compare it with the Franchise Agreement, focusing on renewal, termination, and inventory repurchase provisions.
- Consult with a legal professional specializing in franchise law and the Wisconsin Fair Dealership Law to understand the implications and potential risks.
- Request clarification from the franchisor regarding the specific discrepancies and how they will be addressed in practice.
FDD Citations:
- Item 17: "To the extent that the provisions regarding renewal...are inconsistent with the requirements of the Wisconsin Fair Dealership Law...the renewal provisions will be superseded..."
- Amendment to Franchise Agreement: Multiple sections address inconsistencies with the Wisconsin Fair Dealership Law.
Enforceability of Non-Compete Covenants
Medium
Explanation:
- The FDD states that non-compete covenants are enforceable "only under certain conditions according to Wisconsin Law." This ambiguity creates uncertainty about the scope and enforceability of post-termination restrictions on franchisees in Wisconsin.
- Without clear definition of these "certain conditions," franchisees may face difficulties in understanding their post-termination obligations and planning for future business ventures.
Potential Mitigations:
- Consult with a Wisconsin-based attorney specializing in franchise law to understand the specific conditions under which non-compete covenants are enforceable in the state.
- Request clarification from the franchisor regarding the intended scope and duration of the non-compete covenant and how it aligns with Wisconsin law.
- Negotiate with the franchisor to narrow the scope of the non-compete covenant to ensure it is reasonable and enforceable under Wisconsin law.
FDD Citations:
- Item 17: "Covenants not to compete during the term of and upon termination or expiration of a Franchise Agreement are enforceable only under certain conditions according to Wisconsin Law."
Transfer Restrictions
Medium
Explanation:
- While not explicitly detailed, Item 17 mentions "Transfer and Dispute Resolution," suggesting the existence of transfer restrictions within the Franchise Agreement. These restrictions could limit a franchisee's ability to sell their franchise and realize their investment.
- The lack of specific details on transfer provisions makes it difficult to assess the potential impact on the franchisee's exit strategy.
Potential Mitigations:
- Carefully review the Franchise Agreement for specific details on transfer restrictions, including franchisor approval rights, fees, and other conditions.
- Discuss the transfer process with existing franchisees to understand the practical implications and any challenges they encountered.
- Negotiate with the franchisor to ensure reasonable transfer terms that protect both parties' interests.
FDD Citations:
- Item 17: "Renewal, Termination, Transfer and Dispute Resolution"
Advertising Fund Management and Benefits
Medium
Explanation:
- The FDD describes an advertising council that manages advertising funds, but franchisees who are not yet contributing may be excluded from benefits. This creates a potential disadvantage for new franchisees and raises concerns about the equitable distribution of advertising resources.
- The FDD doesn't specify the criteria for contributing to the fund or the duration of exclusion from benefits, leading to uncertainty for prospective franchisees.
Potential Mitigations:
- Request clarification from the franchisor regarding the criteria for contributing to the advertising fund and the timeline for receiving benefits.
- Inquire about the advertising council's operating rules and guidelines, including the decision-making process and allocation of funds.
- Negotiate with the franchisor to ensure fair access to advertising benefits for all franchisees, regardless of their contribution status.
FDD Citations:
- Unnumbered Section after Item 17: "Franchisees who are not yet contributing to the fund...may be excluded from receiving benefits..."
State Registration Pending
Low
Explanation:
- The FDD indicates that registration is "Pending" in several states, including Wisconsin. While not necessarily a critical risk, operating in a state where registration is pending could create some uncertainty regarding legal compliance and enforceability of the franchise agreement.
Potential Mitigations:
- Confirm the registration status of the franchise in Wisconsin before signing the Franchise Agreement.
- Inquire about the anticipated timeline for registration completion and any potential implications for franchisees.
FDD Citations:
- State Effective Dates: "Wisconsin Pending"
Operational & Brand Risks
3 risks identified
2
1
Dependence on Franchisor's Technology and Website
High
Explanation:
- Franchisees are reliant on the franchisor's website and digital tools for advertising and online presence. Any disruption, technical issues, or changes to the franchisor's website could significantly impact franchisee's ability to attract customers and generate revenue.
- The FDD mentions the franchisor provides "a minimum of one page" on their website, which suggests limited control and customization options for franchisees.
- The franchisor's control over web advertising and the revenue-sharing model (75/25 split) creates dependence and potential conflicts of interest.
Potential Mitigations:
- Negotiate for greater control over online presence, including the option to develop and maintain an independent website or social media presence.
- Clarify in the franchise agreement the service level agreements (SLAs) for website uptime, technical support, and response times.
- Develop alternative marketing strategies that are not solely dependent on the franchisor's website.
FDD Citations:
- Item 11: Description of franchisor's website and web advertising program.
- Item 9: Revenue sharing details for web advertising.
Mandatory Supplier Restrictions
High
Explanation:
- Franchisees are required to purchase fixtures, design, and printing services from approved suppliers or the franchisor. This limits flexibility, potentially increases costs, and creates dependence on the franchisor's chosen vendors.
- The FDD doesn't specify the pricing or quality standards of these mandatory suppliers, raising concerns about potential markups and quality control.
Potential Mitigations:
- Negotiate for greater flexibility in choosing suppliers, or at least request a detailed list of approved suppliers with their pricing and quality standards.
- Compare pricing and quality of approved suppliers with other market options to ensure competitiveness.
- Seek legal advice to understand the implications of mandatory supplier restrictions and potential remedies.
FDD Citations:
- Item 11: "You must acquire fixtures, design and printing services from approved suppliers or us."
- Item 9: Reinforces the mandatory supplier requirement.
Limited Control over Advertising and Marketing
Medium
Explanation:
- While franchisees can develop their own advertising materials, they are subject to franchisor's prior review and approval. This restricts creativity and local marketing adaptation.
- The franchisor reserves the right to institute a regional or national advertising program and charge additional fees, potentially impacting franchisee's marketing budget and ROI.
Potential Mitigations:
- Clarify the advertising approval process in the franchise agreement, including specific criteria and timelines.
- Negotiate for greater flexibility in local marketing initiatives.
- Understand the details of the potential regional/national advertising program, including cost structure and decision-making process.
FDD Citations:
- Item 11: "You may also develop and use your own advertising material, but any material you use is subject to our prior review and approval."
- Item 19: Details about advertising material and franchisor's approval rights.
Performance & ROI Risks
3 risks identified
1
2
Wide Range in Sales Performance
High
Explanation:
- Item 19 reveals a substantial disparity between the highest and lowest reported sales figures ($277,400 vs. $15,540). This wide range indicates significant variability in franchisee performance and suggests that achieving high sales levels is not guaranteed.
- The median sales ($52,290) being considerably lower than the average sales ($59,502) further emphasizes this disparity and suggests a skewed distribution with a few high performers pulling up the average.
Potential Mitigations:
- Thoroughly investigate the reasons behind the wide sales range. Contact existing franchisees, especially those in the lower sales percentiles, to understand their challenges and learn best practices from top performers.
- Develop a realistic business plan based on conservative sales projections, closer to the median rather than the average. This will help prepare for potential challenges and avoid over-reliance on optimistic forecasts.
- Carefully evaluate the specific market demographics and competition in your chosen territory. Factors like tourism, local business density, and existing advertising channels can significantly impact sales potential.
FDD Citations:
- Item 19: "Highest Sales $277,400, Lowest Sales $15,540"
- Item 19: "Average Sales per Map $59,502, Median Sales $52,290"
Limited Financial Performance Data
Medium
Explanation:
- The FDD only provides gross sales data, not net profits. This makes it difficult to assess the true profitability of the franchise and understand the impact of operating expenses.
- The data is based on a single fiscal year (2024) and a subset of franchisees (68 out of 82, and 101 out of 121 maps). This limited sample size may not accurately represent the overall performance of the franchise system.
Potential Mitigations:
- Request the written substantiation mentioned in Item 19 to review the raw data and conduct an independent analysis.
- Develop a detailed expense budget based on industry benchmarks and information gathered from existing franchisees. This will help estimate potential net profits and assess the financial viability of the franchise.
- Consult with a financial advisor to analyze the provided data and develop realistic financial projections.
FDD Citations:
- Item 19: "The figures do not reflect the costs of sales, operating expenses…"
- Item 19: "The total number of franchisees…was 82 and the total number included…is 68."
- Item 19: "NOTE: 101 (out of a total of 121) maps are included…"
Reliance on Local Advertising Sales
Medium
Explanation:
- The franchise model relies heavily on selling advertising space to local businesses. This dependence on local economic conditions and advertising budgets creates vulnerability to economic downturns and changes in advertising spending patterns.
Potential Mitigations:
- Research the local market thoroughly to assess the health of the local economy and the demand for advertising among local businesses.
- Diversify revenue streams by exploring potential partnerships with local tourism organizations or offering complementary services like digital marketing or event promotion.
- Develop strong sales and marketing strategies to effectively target local businesses and demonstrate the value proposition of advertising on Discovery Maps.
FDD Citations:
- Item 19: "Each franchised business generates gross sales by selling advertising space to local businesses…"
FDD Documents by Year
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FDD Year: 2024
Uploaded: 8/8/2025
FDD Documents
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