Explanation

This risk was not identified in the FDD package. The data in Item 20 indicates the franchise system has been stable or slightly contracting in unit count over the past three years, not growing at a rapid pace. Rapid growth can sometimes strain a franchisor's ability to provide adequate support to its franchisees. Since that is not the case here, this specific risk does not appear to be present.

Potential Mitigations

• During discussions with current franchisees, you can ask about their perception of the franchisor's capacity to support new locations should growth accelerate in the future.
• A business advisor can help you evaluate the franchisor's current support infrastructure relative to the system's size.
• Your attorney can review the franchisor's stated obligations for support in the Franchise Agreement to understand their commitments.

Explanation

This risk was not identified in the FDD package. A-1 Concrete Leveling, Inc. (A-1 Concrete) has been in business since 1993 and began franchising that same year, as stated in Item 1. This indicates a long operational history and a mature franchise system, not a new or unproven one. A new system would typically carry higher risks related to unproven models and support structures.

Potential Mitigations

• Speaking with long-term franchisees can provide valuable insight into the system's evolution and stability over time.
• Your business advisor can help you research the company's history and reputation within the industry.
• An accountant can analyze the long-term financial trends in the provided statements to confirm the system's maturity.

Explanation

This risk was not identified in the FDD package. The business of concrete leveling and foundation repair, as described in Item 1, is a long-standing service-based industry. It addresses property maintenance needs rather than being tied to a short-term trend or novelty. Therefore, the risk of the business model being a fad with limited long-term viability appears to be low.

Potential Mitigations

• A business advisor can help you research the long-term demand for foundation and concrete repair services in your local market.
• In discussions with current franchisees, inquire about the stability of customer demand over the years.
• Your accountant can assist in modeling the business's potential performance under various economic conditions to assess its resilience.

Explanation

This risk was not identified in the FDD package. The executive team described in Item 2 appears to have considerable experience. The President & CEO, Mr. Rasnick, has been with the company since 2014 and was previously a franchisee himself, providing valuable perspective from both sides. Other key personnel also have long tenures in relevant fields like law, marketing, and advertising. The management team's experience does not appear to be a risk factor.

Potential Mitigations

• It is still advisable to discuss management's accessibility and responsiveness with current franchisees.
• A business advisor can help you perform background research on the key executives listed in Item 2.
• During your own discussions with the management team, you can assess their strategic vision and understanding of the franchise relationship.

Explanation

This risk was not identified in the FDD package. Item 1 and the accompanying financial statements do not indicate that the franchisor is owned or controlled by a private equity firm. The financials suggest a closely-held or family-owned structure, as the president is the son of the sole shareholder. Therefore, risks often associated with private equity ownership, such as a focus on short-term returns over system health, do not appear to be present here.

Potential Mitigations

• Your attorney can help you confirm the ownership structure of the franchisor through public records.
• When speaking with franchisees, you can inquire about their perception of the ownership's long-term commitment to the brand.
• A business advisor can help you understand the potential implications of any future sale of the company.

Explanation

This risk was not identified in the FDD package. Item 1 states that the franchisor does not have a parent company. The financial statements provided are for the franchisor entity, A-1 Concrete Leveling, Inc., and they appear to be self-sufficient without reliance on a parent. Thus, the risk of hidden financial weaknesses or control issues from an undisclosed parent company is not present.

Potential Mitigations

• Your attorney can verify the corporate structure and confirm the absence of a parent entity through public record searches.
• An accountant can review the financial statements to ensure there are no signs of reliance on an undisclosed entity for financial support.
• In your due diligence, confirming that the franchisor entity holds all key assets and intellectual property is a wise step to discuss with your attorney.

Explanation

This risk was not identified in the FDD package. Item 1 of the FDD explicitly states that the franchisor does not have a predecessor. The company was incorporated in 1993 and has operated under the same identity since. Therefore, there are no risks associated with an undisclosed or problematic history from a prior entity that owned the system.

Potential Mitigations

• Your attorney can confirm the company's history through a review of corporate records.
• Discussions with long-tenured franchisees can provide anecdotal confirmation of the company's continuous operational history.
• A business advisor can assist in researching the company's public profile to ensure there are no unmentioned prior business names or structures.

Explanation

This risk was not identified in the FDD package. Item 3 states that neither the franchisor, its affiliates, nor its officers have been involved in any litigation required to be disclosed. This indicates a clean litigation history regarding franchisee disputes, fraud, or other significant legal actions, which is a positive factor for a prospective franchisee.

Potential Mitigations

• It is still prudent to ask current and former franchisees about any disputes they may have had, even if they did not result in litigation.
• Your attorney can conduct an independent public records search to look for any litigation not disclosed in the FDD.
• Maintaining open communication with the franchisor and legal counsel throughout your relationship can help preemptively address potential conflicts.