Explanation

This risk was not identified. The FDD includes audited financial statements for the guarantor, DB Master Finance Parent LLC, which show significant positive net worth (over $4 billion) and consistent, strong net income over the past three years. This financial strength suggests the franchisor has the resources to support the system and meet its obligations. A parent company guarantee is also in place.

Potential Mitigations

• It is recommended that your accountant review the audited financial statements in Item 21 to confirm their assessment of the franchisor's financial health.
• Ask your business advisor to assess whether the franchisor's financial stability is dependent on new franchise sales versus ongoing royalties.
• Your franchise attorney can confirm the strength and enforceability of the parent company's guarantee of performance.

Explanation

This risk was not identified. A review of the franchisee turnover data in Item 20 for both standalone and combo Baskin-Robbins units reveals low and stable churn rates over the past three years. The combined rate of terminations, non-renewals, and other cessations is consistently in the low single digits, which typically indicates a healthy and stable franchise system with satisfied operators.

Potential Mitigations

• Speaking with a range of current and former franchisees from the lists provided in Item 20 is a good practice to verify the reasons for any turnover.
• Your business advisor can help you calculate and benchmark these turnover rates against industry averages for context.
• Consulting with your attorney about any unusual patterns in the Item 20 data, such as a high number of transfers, is a sound step.

Explanation

This risk was not identified. The data provided in Item 20 shows that the Baskin-Robbins system is mature and exhibiting stable to slightly declining unit counts, not rapid expansion. The number of projected openings is modest relative to the system's large size. This suggests the franchisor's support infrastructure is unlikely to be strained by uncontrolled growth, which is a positive indicator for new franchisees seeking adequate assistance.

Potential Mitigations

• A business advisor can help you evaluate the franchisor's growth plans in the context of their support staff and resources.
• When interviewing franchisees, it is useful to ask about the quality and timeliness of support they currently receive from the corporate office.
• Your accountant can review the franchisor's financial statements to confirm they have the resources to support their stated growth projections.

Explanation

This risk was not identified. Baskin-Robbins is one of the oldest and most established franchise systems in the world, having started in 1946 and franchising since 1948, as disclosed in Item 1. The brand has thousands of units globally and a long, proven operational history. This maturity significantly reduces the risks associated with unproven business models or startup franchisors.

Potential Mitigations

• Engaging a business advisor to research the brand's current market position and competitive landscape is still a valuable exercise.
• It is wise to ask existing franchisees about how the brand has evolved to stay relevant over time.
• Your attorney can review the history of the franchisor entity itself to understand its lineage within the larger corporate structure.

Explanation

This risk was not identified. Baskin-Robbins' core business is selling ice cream and related frozen desserts. This is a classic, multi-generational consumer product with a long history of sustained demand. The business is not dependent on a fleeting trend or novel technology, which suggests long-term market viability and stability.

Potential Mitigations

• A business advisor can help you research the current and projected state of the frozen dessert industry to understand competitive pressures.
• It is prudent to discuss with current franchisees how seasonality and local competition affect their business.
• Your accountant can help you model the financial performance of the business based on its established, non-fad characteristics.

Explanation

This risk was not identified. The executive team described in Item 2 is composed of seasoned professionals with extensive experience in the franchise and restaurant industries. Many executives have long tenures with Baskin-Robbins, its affiliate Dunkin', and the parent company, Inspire Brands. This depth of experience suggests a strong capacity to manage the franchise system effectively.

Potential Mitigations

• Your business advisor can help you research the public track record and reputation of the key executives listed.
• When interviewing franchisees, asking about their perception of the management team's competence and support is a valuable step.
• In discussions with the franchisor, you can inquire about the specific experience of the field support staff who will be your direct contacts.

Explanation

This risk was not identified. The FDD provides extensive disclosure in Item 1 regarding the complex parent and affiliate corporate structure, including the ultimate parent, Inspire Brands. Furthermore, Item 21 includes audited financial statements for the guarantor, DB Master Finance Parent LLC, as well as a copy of the Guarantee of Performance, providing a clear picture of the entities backing the franchise agreement.

Potential Mitigations

• Your attorney should review the corporate structure and the Guarantee of Performance to ensure you understand who is responsible for the franchisor's obligations.
• Having an accountant analyze the provided parent and guarantor financial statements is a crucial due diligence step.
• Clarifying any questions about the relationships between the various affiliated entities with the franchisor is advisable.

Explanation

This risk was not identified. The FDD's Item 1 clearly discloses the franchisor's history and predecessors, dating back to 1948. Item 3 includes litigation history involving predecessor entities where relevant. The disclosure appears to provide a reasonable historical context for the franchise system.

Potential Mitigations

• A franchise attorney can help you interpret the disclosures regarding predecessors and their relevance to the current offering.
• Asking long-term franchisees about their experiences under any previous ownership can provide valuable insight.
• Your business advisor can assist in researching public information about the brand's history under prior ownership.