Explanation

This risk was not identified. The FDD provides audited financial statements for the parent company and guarantor, Ace Hardware Corporation, which is a large, financially stable, and profitable multi-billion dollar company. A formal Guaranty of Performance from the parent company is also provided, which significantly mitigates financial risk related to the franchisor entity itself. An accountant should review these documents for full context.

Potential Mitigations

• A franchise accountant should review the parent company's audited financial statements and the accompanying Guaranty of Performance to confirm financial strength.
• Discuss the structure of the franchisor and its parent company with your attorney to understand the full scope of the guarantee.
• Your business advisor can help assess if the franchisor's direct resources, separate from the parent, are adequate for its support obligations.

Explanation

This risk was not identified in the FDD package. The franchisor, originally founded as Handyman Matters in 2000 and franchising since 2001, is an established system with over two decades of operational history. An unproven system can present higher risks due to a lack of established brand recognition, untested support systems, and a limited franchisee performance history.

Potential Mitigations

• When evaluating any franchise, it is beneficial to have a business advisor help you assess the franchisor's history and track record.
• An attorney can review the franchise agreement for protections that may be more common in agreements from established systems.
• Your accountant can analyze the provided financial data, which is typically more robust for established franchisors.

Explanation

This risk was not identified. The business provides handyman, repair, and maintenance services for residential and commercial properties. Home and property maintenance is a long-standing industry with consistent demand, not a business model based on a fleeting trend. A fad-based business carries the risk of declining consumer interest, which can jeopardize your long-term investment.

Potential Mitigations

• For any business concept, a business advisor can help you research the long-term market demand and competitive landscape.
• Discuss the stability of the industry with your financial advisor to understand its resilience to economic cycles.
• Your attorney can review the franchise term to ensure it aligns with a reasonable period to build a sustainable business.

Explanation

This risk was not identified in the FDD package. The executive team described in Item 2 possesses extensive experience in both the handyman services industry and in franchising. The founder has been with the company since its inception, and other key executives have long tenures with the company or its parent, Ace Hardware. Inexperienced management can be a significant risk, potentially leading to poor strategic decisions and inadequate franchisee support.

Potential Mitigations

• It is always prudent to have a business advisor help you vet the backgrounds of the key management team for any franchise investment.
• When speaking with current franchisees, asking about their perception of management's competence and support is a valuable due diligence step.
• Your attorney can confirm that the management experience disclosed in Item 2 aligns with the support obligations outlined in Item 11.

Explanation

This risk was not identified. The franchisor is an indirect subsidiary of Ace Hardware Corporation, which is a retailer-owned cooperative, not a private equity firm. Private equity ownership can sometimes introduce risks related to short-term profit motives over the long-term health of the brand, or a higher likelihood of the system being sold.

Potential Mitigations

• Your attorney can help you investigate the ownership structure of any franchisor to understand potential influences on its business strategy.
• Discuss the franchisor's long-term vision and capital structure with a business advisor to assess its stability.
• In discussions with current franchisees, inquire about any recent changes in ownership and the impact on their business.

Explanation

This risk was not identified. Item 1 clearly discloses the direct parent company and the ultimate parent, Ace Hardware Corporation. Furthermore, the FDD includes the audited financial statements and a formal Guaranty of Performance from the ultimate parent company in Item 21 and its exhibit. A failure to disclose a parent company can obscure the true financial backing and control structure of a franchise system.

Potential Mitigations

• Your attorney should always verify that the FDD properly discloses all parent and affiliate companies as required by law.
• If a parent company's financials are provided or required, an accountant's review is essential to assess the overall financial health of the system.
• A business advisor can help you understand the relationships between the franchisor, its parents, and any affiliates.

Explanation

This risk was not identified. The FDD clearly discloses the franchisor's predecessor, Handyman Matters Franchise Corporation, and the date of its acquisition by Ace Hardware. The litigation and bankruptcy history provided in Items 3 and 4 covers this predecessor where applicable, with no significant red flags noted. A lack of transparency about a predecessor's history could hide past issues that might affect the current system.

Potential Mitigations

• Your attorney should carefully review the FDD for any information related to predecessor companies.
• It is wise to ask long-term franchisees about their experiences under any previous ownership or brand name.
• A business advisor can help you research the history and reputation of any predecessor entities.