Bottom line
- Total investment $542K – $1.1M including a $49K franchise fee, 6.0% ongoing royalty.
- Average unit revenue of $597K/year (median $603K). Estimated payback in 5.1 years.
- Rated STRONG with a risk score of 44/100. SBA loan default rate of 0.0% across 162 loans (below the industry average).
- System growing at 170.0% CAGR over 3 years with 55 total units — strong expansion trajectory.
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Hounds Town USA unit return on the cash you put in?
Unlevered ROIC · per unit
12%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Hounds Town USA units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$1.2M
on $6.0M purchase
Total debt
$4.8M
SBA $3.0M + senior + seller note
Overview
About
Hounds Town USA operates doggy daycare and boarding facilities where franchisees manage daily pet care operations, including staff hiring/training, facility maintenance, customer acquisition, and veterinary coordination. Franchisees oversee the customer-facing side of providing supervised playtime, boarding, grooming, and training services to dog owners in their protected territory.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 13 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Hounds Town shows signs of growth-at-all-costs franchise model with aggressive unit expansion, questionable financial performance metrics, and prior litigation over support obligations.
Score breakdown · what drove the 44 / 100 rating
- 01MINORExplosive 45.9% YoY unit growth is unsustainable and suggests aggressive recruitment over profitability focus; typical mature franchises grow 5-15% annually
- 02MINORNet income of $155,505 on $597,260 revenue (26% net margin) appears inflated — industry standard for pet services is 10-15%; suggests either aggressive accounting or cherry-picked top performers in Item 19
- 03HIGHLitigation history involving breach of contract on buildout assistance indicates franchisor-franchisee disputes over support promises; 'dismissed with prejudice' may reflect settlement rather than merit
- 04MINORHigh royalty rate (6%) combined with high investment ceiling ($1.06M) creates substantial fixed costs with thin margins; breakeven analysis needed
- 05MINORFranchise fee ($49K) seems low relative to investment range, suggesting franchisor prioritizes recruitment velocity over franchisee success
- 06MINORNo Item 19 financial data provided; averages cited may not represent median performance — top 20% likely distort the picture
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
13 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Hounds Town USA · FDD (2024) PDF