Childcare & Education · Half-Day Preschool✓ Verified · 2025 FDD207-page deep extractPE-acquired Aug 2025

Ivybrook Academy

Reggio Emilia–aligned half-day preschool franchise · 41 outlets across 13 states · founded 2007, franchising since 2015 · headquartered Weddington, NC

The most complete Ivybrook Academy analysis on the internet. Built from the full 207-page 2025 FDD (file #637976, filed with WI DFI; issued March 28, 2025; amended September 15, 2025), including the image-only Exhibit J financial statements recovered via vision OCR. Acquired August 29, 2025 by Crux I Ivybrook (Aggregator), LP — a Dallas-based PE aggregator.

Unit economics ↓Franchisor financials ↓Growth & footprint ↓Contract burden ↓Red flags ↓Diligence questions ↓

Composite scores

System health

Franchisor strength

Fee headroom

Contract ease

Outlets (end 2024)

40 franchised + 1 affiliate

Net new 2024

3-yr avg +7.7

Signed not opened

105% of operating base

Franchise fee

$50K

$35K / $25K MUDA 2nd / 3rd

Initial investment

$540K–$870K

MUDA 1st: up to $930K

Recurring %

+ $250/mo tech (→10%+ in 2026)

Term

15 yrs

+ 2× 10-yr renewals

Franchisee 3Y+ avg GR

$968K

22% pre-owner-comp EBITDA

Affiliate flagship

$1.49M

31% pre-owner-comp EBITDA

Royalty / Brand Fund

7% / 1%

Brand Fund → 2% in 2026

Auditor

Reese CPA LLC

Clean / no going concern

Franchisor equity 12/31/24

$346K

vs $540K-$870K invest

Item 19 unit economics

FPR present · 5 tables

Affiliate (1 unit, 7 cls)

$1488K

avg gross revenue 2024

$456KEBITDA · 31% margin

EBITDA as defined by Ivybrook excludes owner compensation — pre-owner-comp operating profit, not take-home.

Franchisees 3Y+ (n=18)

$968K

avg gross revenue 2024

$214KEBITDA · 22% margin

EBITDA as defined by Ivybrook excludes owner compensation — pre-owner-comp operating profit, not take-home.

Franchisees 2Y+ (n=24)

$858K

avg gross revenue 2024

$159KEBITDA · 19% margin

EBITDA as defined by Ivybrook excludes owner compensation — pre-owner-comp operating profit, not take-home.

Revenue by classroom count · 3-year+ franchisees (n=19)

5 classrooms · n=4$845K

6 classrooms · n=13$1074K

7 classrooms · n=2$1319K

7-classroom schools generate ~56% more gross revenue than 5-classroom schools. The single affiliate-owned school is also 7-classroom and is the highest performer in the system.

Where the money goes · 2-year+ franchisee average (% of revenue)

41%

20%

19%

Labor

Rent

Royalty

Supplies

Insurance

Advertising

Other

EBITDA

Labor (41%) and rent (20%) are 61% of revenue. Royalty 6%. Pre-owner-comp EBITDA 19%. The 4× jump in advertising expense in 2024 vs 2023 ($118K vs $31K) reflects the first significant Brand Fund deployment.

Tuition price ranges 2024

1 day/week

$250–$365

monthly

2 days/week

$335–$510

monthly

3 days/week

$435–$675

monthly

4 days/week

$500–$770

monthly

5 days/week

$575–$890

monthly

Franchisor financials · Item 21 / Exhibit J

Vision OCR recoveredAuditor: Reese CPA LLCClean opinion · no going concern

Revenue & net income · FY 2022–2024

FY2022

$1.38M

total revenue

$309K

net income

FY2023

$1.83M

total revenue

$436K

net income

FY2024

$2.17M

total revenue

$313K

net income

Revenue trend · $1.38M → $1.83M → $2.17M (+58% over 3 years)

Revenue YoY 2024: +18.4%

Royalty growth 2024: +22.5%

2024 NI hit by new $96K push-down tax

Members' equity 2021–2024

Dec 2021$136K

Dec 2022$145K

Dec 2023$48K

Dec 2024$346K

The 2023 trough ($48K) reflects $533K of distributions vs $436K of net income. 2024 recovered to $346K — the figure disclosed in the Virginia addendum risk factor.

Total assets 12/31/24

$3.89M

vs $2.91M (12/31/23) +34%

Cash 12/31/24

$300K

3-year stable

Deferred franchise fees

$3.43M

Unearned from 42-unit backlog

Operating cash flow 2024

$444K

3-year positive

Auditor's opinion (recovered from Exhibit J p3)

Reese CPA LLC of Ft. Collins, Colorado audited the financial statements as of December 31, 2024, 2023, and 2022 and issued an unmodified (clean) opinion dated March 13, 2025. Going concern was explicitly evaluated; no modification was issued. The audit signature date pre-dates the August 29, 2025 PE acquisition, which is therefore not in the subsequent-events note.

Key reconciliation

Members' equity in audited B/S = $345,862 ✓ matches Virginia addendum risk factor.
Total revenue in audited income statement = $2,171,363 ✓ matches Item 8 narrative disclosure.

Financial-condition risk · re-assessed

Cover Special Risk #2 says financial condition "calls into question" the franchisor's ability to support franchisees. This is structurally driven by:

· Low absolute equity ($346K) vs initial investment range ($540K–$870K)
· Heavy unearned revenue ($3.43M deferred franchise fees from 42 unopened agreements)
· Illinois AG–imposed fee deferral (IL addendum)
· Virginia addendum disclosure (VA addendum risk factor)

Mitigating signal

Reese CPA's clean opinion materially softens the qualitative reading. Auditor evaluated going concern and concluded entity can continue. Operating cash flow positive in all 3 years ($312K → $578K → $444K).

Growth & footprint · Item 20

0 terminations · 0 transfers · 3 yrs

Outlet trajectory · franchised only

2022

2023

+8−1

2024

+8−1

17 → 26 → 33 → 40 outlets (start 2022 → end 2024)

⚠ Special Risk #4

signed agreements not yet opened

105% of currently operating base. Conversion of this backlog over the next 12-24 months drives the franchisor's revenue ramp. If conversion stalls, system growth and franchisor revenue stall too.

16 projected new openings disclosed for next FY (FY2025) — 38% of backlog.

Open outlets by state · end 2024 (n=40)

North Carolina concentration: 19.5% of total open outlets. Regional system, not yet national.

Signed but not opened by state (n=42)

Texas leads the unopened pipeline (8 agreements). Florida (5), Pennsylvania (4), and 8 additional states with 1-3 each.

Contract burden · Items 5, 6, 7, 17 + Franchise Agreement deep walk

~25 clauses · 9 burden families

Recurring fees · % of Gross Revenue

9%+ $250/mo tech

Royalty7%

Brand Fund (→2% in 2026)1%

Local marketing min1%

Brand Fund increase to 2% in 2026 raises floor to 10%+ of GR.

Initial fees to franchisor

$82.5K

paid to franchisor or affiliate

Initial franchise fee$50,000

Real estate coordination$10,000

Training & opening support$15,000

Décor package (~90 days pre-open)$7,500

MUDA second unit: $35K · third unit: $25K · paid at MUDA signing.

Total initial investment

$540K–$870K

single unit · MUDA 1st unit up to $930K

Construction / leasehold$277K–$519K

FF&E + décor$75K–$105K

Playground$10K–$25K

Grand opening marketing$20K–$25K

3-month working capital$30K–$35K

Financial obligations8 clauses

Royalty 7% · 1.5%/mo late · $1K/wk noncompliance · 10% cure markup · franchisor may apply payments to any past-due indebtedness in any priority

EFT / auto-debit1 clauses

FA §3.12: pre-authorized bank draft mandatory; franchisor may change method and adjust due date unilaterally

Data ownership6 clauses

FA §13.17: all Franchised Business Data deemed owned by franchisor; franchisee has only a limited license to use its own operating data

System change2 clauses

FA §10.2: required changes may demand 'significant capital expenditures unknown on the Effective Date and not fully amortizable over remaining term'

Remodel / refurbish3 clauses

FA §13.2/13.3: franchisor may require structural changes, remodeling, equipment replacement at franchisee expense to conform to then-current image

FMV mechanics2 clauses

Lease rider: independent appraiser baseball-arbitration of rent on franchisor lease takeover; 60-day post-term FMV asset option

Tax / permit / debt3 clauses

Tax record submission required · permit compliance on franchisee · lease subordination to encumbrances

Entity / guarantor6 clauses

Single-purpose entity required · stop-transfer instructions · Exhibit F unlimited personal guaranty by all owners + spouses

Insurance minimums4 clauses

$2M per occurrence general liability · $100K employer · 60 days pre-open · franchisor named additional insured primary non-contributory

Term ladder · 35 possible years

Initial · 15 years

Renewal 1 · 10 years

Renewal 2 · 10 years

· No franchisor termination without cause

· Renewal: greater of $10K or 10% of then-current franchise fee

· 2-year / 10-mile post-term noncompete (or Territory, greater of)

Red flags · 8 surfaced

1 critical · 5 warning · 2 info

criticalFinancial

Franchisor financial condition flagged

Cover Special Risk #2 explicitly states financial condition 'calls into question the Franchisor's financial ability to provide services and support to you.' Illinois Attorney General imposed fee deferral 'due to our financial condition.' Virginia addendum discloses initial investment ($540K-$869K) exceeds franchisor stockholder's equity of $345,862 at Dec 31, 2024. Mitigant: Reese CPA LLC issued an unmodified clean opinion with NO going-concern modification.

Source: Cover p4, IL Addendum p134, VA Addendum p137

warningPipeline

Large unopened backlog

42 signed franchise agreements not yet opened vs 40 currently operating. Cover Special Risk #4 warns of opening delays. Indicates execution risk on pipeline conversion.

Source: Item 20 Table 5, p52-53

warningSupplier Control

70-90% supplier control

Cost of items required from franchisor, affiliates, or designated suppliers represents 70-90% of total purchases both at establishment and during operation. Affiliate Catapult is exclusive supplier of The Student Hub software ($36K affiliate revenue from franchisees in 2024).

Source: Item 8, p22

warningData Ownership

Franchisor owns all operating data

FA §13.17 deems all 'Franchised Business Data' to be owned by franchisor; franchisee has only a limited license to use its own operating data while the Agreement is in effect. Franchisor has unlimited right to access franchisee technology at any time without notice (FA §12.6/12.7).

Source: FA §13.17, §12.6, §12.7, p88-89

warningStandard of Care

No good-faith covenant

FA §21.2 explicitly disclaims any fiduciary relationship and states no covenant of good faith and fair dealing shall be implied except as required by statute. Whenever the Agreement permits franchisor to act, franchisor is free to act in its own self-interest.

Source: FA §21.2, p110

warningBrand Fund

Brand Fund increase scheduled

Brand Fund contribution rises from 1% to 2% of Gross Revenue in 2026, raising the recurring fee floor from 9% (royalty + brand fund + local marketing + technology) to 10%+ of revenue.

Source: Item 6 table, p12

infoTerritory

Thin territorial protection

Territory is the lesser of 125,000 population or 3-mile radius. Exclusive only against other Ivybrook Academy schools — no protection against franchisor customer solicitation inside the Territory. Modifiable at renewal. Franchisee restricted to brick-and-mortar only.

Source: Item 12, p32-33

infoAcquisition

Post-FDD private equity acquisition

On August 29, 2025 — 5 months after the FDD issuance and 2 weeks before the September amendment — Ivybrook Franchising and affiliates (McWilliams Education Services, Catapult Industries) were acquired by Ivybrook OpCo LLC, a subsidiary of Ivybrook HoldCo, in turn a subsidiary of Crux I Ivybrook (Aggregator), LP (Dallas, TX). Founders Drew and Jennifer McWilliams retained a stake. The acquisition is disclosed in Item 1 but post-dates the audited FY2024 statements (subsequent-events evaluation cutoff March 13, 2025).

Source: Item 1, p8

Document-level contradictions preserved

5 surfaced + 3 from financial notes

Trademark ownership conflict

Item 1 body (p33) says Ivybrook Franchising owns the principal trademarks. Exhibit J Note 1 says McWilliams Properties, LLC (a previously undisclosed affiliate, formed 2005) owns them and licenses to Ivybrook under a 20-year auto-renewing license.

Catapult formation date

Item 1 body says October 25, 2019. Exhibit J Note 1 says October 25, 2022. Two-year discrepancy on the affiliate that supplies The Student Hub software.

Advertising expense $128K vs $118K

FY2024 income statement line shows $128,504. Note 1 narrative discloses $118,504. $10K discrepancy within the same audited document.

Item 19 cohort 18 vs 19

Table 2C labels the 3-year+ cohort as 18 schools. Table 3 narrative says 19 schools and the row sums to 19. Off-by-one within the same FPR.

Gross Revenue defined two ways

Item 6 Note 2 includes business interruption insurance proceeds. Item 19 Note 3 omits them. Material when royalty/Brand Fund applies to insurance recoveries.

Exhibit K vs Exhibit L labeling

TOC and Item 20 body say Exhibit K is the franchisee list. Page 2 'How to Use' Q&A and the physical exhibit headers say Exhibit L. Document-level mislabeling across four locations.

Questions to ask before signing

Of your 42 signed-not-opened agreements, how many have site approval and how many are stalled at site selection?

Why: 42 unopened backlog is the largest single risk to system growth (Special Risk #4).

What was the average and median time-to-open for franchisees that opened in 2023 and 2024?

Why: Item 11 says 6–18 months; FA §16 allows termination after 18 months. Hidden delays would be visible here.

What is the franchisor's cash position today and what is its budget for 2026?

Why: $300K cash + $346K equity is thin against $3.4M deferred franchise fees. Auditor opinion is clean but the qualitative cover risk remains.

Who is paying for the planned 2026 Brand Fund increase from 1% to 2%?

Why: Adds 1 point to recurring fee floor. Franchisees only, or company-owned schools too?

How many franchisees achieved or exceeded the disclosed median EBITDA after also drawing an owner salary?

Why: Item 19 EBITDA excludes owner compensation. Median 2Y+ EBITDA of $152K becomes $0–$80K after a market-rate owner salary depending on hours.

What are the top three cure-cost or noncompliance fees the franchisor has actually charged any franchisee in the last 12 months?

Why: FA §3.10 allows up to $1,000/wk plus 10% markup on cure costs with no cap.

What is the franchisor's data-access policy in practice?

Why: FA §12.6/12.7 + §13.17 give franchisor unlimited real-time access to all franchisee operating data and ownership of all 'Franchised Business Data'.

How will the August 2025 Crux acquisition change the franchisor support team and any planned investments?

Why: PE acquisition post-dates FY2024 financials; Item 1 disclosure but no support-impact narrative.

Has any state administrator (other than IL/MN/VA) raised an objection during the current registration cycle?

Why: Only 3 state addenda exist; IL fee deferral was AG-imposed; states with Pending status may add similar conditions.

Q10

Will the franchisor share unredacted franchisee EBITDA data so I can validate the 19% / 22% margin claims?

Why: Item 19 says substantiation 'will be made available to prospective franchisees upon reasonable request.'

Extraction provenance

Full transparency

Source document

637976-2025-Ivybrook-Academy.pdf
207 pages · 8.2 MB · WI DFI registry

Issued: March 28, 2025
Amended: September 15, 2025

Pipeline

13-step shadow extraction → depth pass (financial notes / contract burdens / promotion audit) → publish gate → reconciliation pass (regression check / conflict adjudication / reconciled gate / patch log) → RP1 vision-OCR Exhibit J recovery

Render cascade: pdftoppm if available → fitz pixmap @ 200 DPI → multimodal vision OCR

Coverage metrics

~165

canonical fields

tables

exhibits

~25

contract burdens

red flags surfaced

contradictions preserved

99.5% weighted coverage

Vision OCR breakthrough · Exhibit J

Exhibit J (financial statements, pages 168–197) was scanned-image only in the FDD text layer — no statement content extractable via standard PyMuPDF. The render cascade rendered all 30 pages to PNG via fitz pixmap @ 200 DPI, then the multimodal Read tool's vision capability OCR'd each page directly. This recovered the auditor identity (Reese CPA LLC), the unmodified clean opinion, the full balance sheet, income statement, statement of changes in members' equity, statement of cash flows, and all 7 notes to financial statements — closing what had been the single largest gap in the extraction.

Last verified 2026-04-06 · Source: WI DFI franchise filings · file #637976

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