Risk Score
Pending analysis
Investment Range
$1,479,974 - $2,446,135
Franchise Fee
$49,500
Total US Locations
30
Business Summary
K9 Resorts operates luxury pet care facilities offering dog daycare and boarding services. These facilities are designed with high-end amenities such as designer suites, premium dog beds, advanced air purification systems, and individual televisions in each suite, using anti-microbial materials for flooring and outdoor turf.
Corporate History
K9 Franchising, LLC was formed on February 9, 2016, as a New Jersey limited liability company. It operates under the trade name K9 Resorts, K9 Resorts Luxury Pet Hotel, or K9 Resorts Boutique Pet Hotel. The current company's parent, K-9 Holdings, LLC, was formed on January 26, 2016, and acquired the Proprietary Marks from an affiliate, K9 Resorts, LLC. The predecessor, K-9 Resorts Franchising, LLC, was formed on November 17, 2010, and began offering K9 Resorts franchises in January 2011. K-9 Franchising, LLC began offering franchises in March 2016, after the addition of new owners, and took over servicing existing franchisees from its predecessor on November 1, 2016, through an Assignment and Assumption Agreement.
Financial Overview
Investment Range
$1,479,974 - $2,446,135
Franchise Fee (Low)
$49,500
Franchise Fee (High)
$49,500
Royalty %
7%
Marketing %
1%
Equipment Costs (Low)
$200,000
Equipment Costs (High)
$231,000
Working Capital
$102,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Going concern qualification
Financial Health Notes
K9 Franchising, LLC's auditors have issued a going concern qualification, indicating substantial doubt about the franchisor's financial ability to provide services and support to its franchisees. The company has a history of losses, negative cash flows from operations, and a working capital deficit. However, its parent company, K-9 Holdings, LLC, has the ability and intent to continue providing financial support. K-9 Holdings, LLC recently contributed over $2.5 million to K9 Franchising, LLC in early 2024 following a $10 million equity raise, with plans to continue funding operations until the company becomes self-sustaining.
Financing Details
K9 Resorts does not offer any direct or indirect financing to its franchisees. K9 Resorts also does not guarantee any franchisee's note, lease, or other obligations.
Performance Metrics
Total US Locations
30
Franchised Units
24
Corporate Units
6
Avg Square Footage
5,600
Franchising Since
2011
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
1
Litigation Summary
K9 Resorts was involved in one litigation case, Sonflower LLC, Edgar S. DeLong, Jr. and Cheri A. Delong v. K9 Resorts Malvern, LLC, which was filed on April 12, 2021, against K9 Resorts' affiliate. The plaintiffs, a former franchisee and its principals, alleged breach of a management agreement, unjust enrichment, replevin, and conversion, seeking unspecified compensatory damages and an accounting of the affiliate's revenues and expenses. The parties reached a settlement agreement on June 25, 2021, leading to the dismissal of the litigation. As part of the settlement, K9 Resorts Malvern, LLC paid $125,250 to the former franchisee's lender to release a UCC lien, and all ownership rights to equipment owned by Sonflower, LLC were assigned to K9 Resorts Malvern, LLC. Sonflower also provided a release to K9 Resorts Malvern.
Bankruptcy History
K9 Franchising, LLC has no bankruptcy information to be disclosed in Item 4 of its FDD. This indicates that neither the franchisor nor its key personnel have filed for bankruptcy or been involved in any bankruptcy proceedings that would require disclosure.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, K9 Resorts franchisees must meet several conditions. These include notifying the franchisor in writing 6 to 13 months before the current term expires, having the right to lease the current premises for an additional 10 years or securing approved substitute premises, and completing all required maintenance, refurbishing, and remodeling to meet current K9 Resorts image standards. Franchisees must also be in full compliance with the current franchise agreement and any other agreements with the franchisor or its affiliates, and have satisfied all monetary obligations. Additionally, they are required to execute the franchisor's then-current franchise agreement and renewal addendum, satisfy current training requirements for new franchisees, pay a $7,500 renewal fee, and sign a general release of claims against the franchisor and its affiliates. The protected area may also be re-evaluated during the renewal process.
Training & Support Program
Franchisor Assistance
K9 Resorts provides extensive assistance to its franchisees both before and after opening. Before opening, K9 Resorts assists with site selection by reviewing proposed locations, providing prototypical floor plans, and conducting initial training for up to three key personnel (owner/operating principal, General Manager, Assistant Manager) in Fanwood or Hamilton, New Jersey, at the franchised location, or virtually. K9 Resorts also provides information for selecting suppliers, initial inventory, and computer systems, and loans a confidential Operations Manual. During operation, K9 Resorts offers ongoing consultation and advice on client procurement, sales, marketing, inventory, and personnel development, provided via phone, email, intranet, or on-site visits. K9 Resorts manages a Brand Development Fund for system-wide advertising, and franchisees contribute to this fund and must participate in designated local SEO packages. K9 Resorts also hosts annual franchisee meetings, which are mandatory for at least one owner or representative. The franchisor may also offer additional on-site assistance for a fee.
Initial Training Hours
60
Training Location
Fanwood, New Jersey or Hamilton, New Jersey or Franchised Business location or virtually
Ongoing Support
After opening, K9 Resorts franchisees receive ongoing consultation and advice from the franchisor regarding client procurement, sales techniques, marketing, inventory, personnel development, and other business and operational matters. This support is provided through various methods including telephone, facsimile, email, intranet postings, and periodic on-site assistance. Franchisees are required to participate in and contribute to the Brand Development Fund for system-wide advertising and marketing campaigns, and must also participate in a designated local SEO package. K9 Resorts may establish special promotional programs that franchisees are required to join. Additionally, franchisees must attend mandatory annual franchisee meetings to discuss new procedures, protocols, and marketing strategies. The franchisor also offers additional on-site training for a fee.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Hands-On
Territory Type
Protected
Territory Size Requirements
K9 Resorts provides franchisees with a Protected Area typically defined as a four-mile radius around their franchised business or an area including a population of 160,000 people, whichever is less. The exact size of the Protected Area depends on factors like population density, demographic characteristics, proximity to major roads, residential areas, commercial businesses, competing businesses, and geographical features. While K9 Resorts will not operate another K9 Resorts business within this Protected Area, other K9 Resorts locations or affiliate-owned businesses may overlap with the territory. Franchisees are restricted from actively marketing outside their Protected Area without prior written consent from the franchisor.
Staffing Notes
K9 Resorts strongly recommends that the franchisee or their Operating Principal (who must be an equity owner of at least 10%) personally participate in the business's day-to-day operations and have the authority for all operational decisions. If the owner or Operating Principal does not participate daily, a General Manager, approved by the franchisor, must be hired to provide direct on-premises supervision during all operating hours. This General Manager, along with an Assistant Manager if applicable, must satisfactorily complete the initial training program and obtain all required pet certifications. All employees are also required to complete and pass K9 Resorts' internal training before starting work. Franchisees are responsible for ensuring sufficient qualified personnel are employed and for all employment decisions.