Explanation

This risk was not identified in the FDD. Item 20 data for the past three years does not show any franchisee terminations, non-renewals, or cessations of operation. However, given the franchise system is very new, this data reflects a limited operating history. Monitoring franchisee turnover is crucial as a system matures.

Potential Mitigations

• Engaging a business advisor to research typical turnover rates for similar franchise systems can provide valuable context.
• It is wise to ask your attorney how to best question current and former franchisees about their satisfaction and experiences.
• An accountant can help you analyze future Item 20 data to identify any concerning trends in franchisee departures.

Explanation

This risk was not identified. The business of pavement and parking lot striping is a long-established service industry. While demand can be cyclical, it is not based on a novel or short-term trend. The business model appears to be a standard offering for a necessary commercial maintenance service.

Potential Mitigations

• Your business advisor can help you research the long-term market demand and competitive landscape for this industry in your area.
• It is prudent to have your accountant help you develop financial projections that account for potential economic cycles.
• An attorney can review the agreement for flexibility in adapting services to future market changes.

Explanation

This risk was not identified. Item 2 indicates that the key principals have extensive operational experience in the striping industry through an affiliated company operating since 2005. While their direct franchising history is more recent, this deep industry-specific background provides a strong foundation of relevant knowledge.

Potential Mitigations

• A business advisor can help you verify the specific roles and accomplishments of the management team in their prior ventures.
• Discuss the management team's franchising expertise and support structure with current franchisees.
• Your attorney should confirm that the key individuals mentioned in Item 2 are contractually committed to the franchise.

Explanation

This risk was not identified in the FDD. The disclosures in Item 1 and Item 2 do not indicate that the franchisor is owned or controlled by a private equity firm. Ownership appears to be held by the founding individuals, suggesting a different set of motivations and timelines than a typical financial buyer.

Potential Mitigations

• Your attorney can help you verify the ownership structure through public records to confirm the absence of private equity involvement.
• It is still wise to ask your attorney to review the franchisor's rights to sell or assign the franchise system.
• A business advisor can help you understand the potential pros and cons of different types of franchisor ownership structures.

Explanation

This risk was not identified. Item 1 discloses the existence of affiliate companies, including Striper Holdings, Inc., which holds the intellectual property. However, there is no indication of a controlling parent company whose financials would be material and are being improperly withheld. The corporate structure, while having multiple entities, appears to be disclosed.

Potential Mitigations

• Your accountant should review the disclosed financials of the franchisor and any provided affiliate statements carefully.
• It is prudent to have your attorney analyze the relationships between the disclosed affiliate entities and their roles in the franchise system.
• A business advisor can help you assess if the disclosed corporate structure poses any unusual operational risks.

Explanation

This risk was not identified. Item 1 does not disclose any predecessors from which Striper Industries acquired the bulk of its assets to start the franchise system. The franchisor entity appears to have developed the franchise system itself, although it leverages the operational experience of an affiliate. No negative history associated with a predecessor is disclosed.

Potential Mitigations

• When speaking with the franchisor, it's useful to ask about the history and development of the business concept with your business advisor.
• Your attorney can confirm the formation date and history of the franchisor entity through public record searches.
• Interviewing long-term employees or early franchisees can provide insight into the system's origins.

Explanation

This risk was not identified. Item 3 of the FDD states that no litigation is required to be disclosed. This means the franchisor, its predecessors, and management do not have current or past material litigation involving claims of fraud, franchise law violations, or similar allegations that would legally require disclosure.

Potential Mitigations

• Your attorney can conduct independent public record searches for litigation that may not have met the threshold for disclosure.
• Asking current and former franchisees about their experiences with disputes, whether they resulted in litigation or not, is a valuable due diligence step.
• A business advisor can help you understand common areas of dispute within the franchising industry.