Explanation

This risk was not identified. The audited financial statements provided for Batteries Plus, L.L.C. (Batteries Plus) show consistent profitability with a net income of over $21 million in 2024 and a strong balance sheet with over $300 million in member's equity. Financial instability does not appear to be a current risk. However, a franchisor's financial health is critical as it supports their ability to grow the brand and support franchisees.

Potential Mitigations

• For a comprehensive understanding of the franchisor's financial condition, ask your accountant to review the complete, audited financial statements and accompanying notes.
• It is wise to have a business advisor help you assess the franchisor’s long-term financial stability and its capacity to support the system.
• Legal counsel should be consulted to understand any financial performance-related disclosures or risk factors mentioned in the FDD.

Explanation

This risk was not identified. Item 20 data shows that the franchise system is mature and its growth has been stable to slightly declining over the past two years, not expanding at a pace that would likely strain its resources. Furthermore, the financial statements in Item 21 indicate that Batteries Plus is a well-established company with significant resources, suggesting it can adequately support its current and projected number of franchisees.

Potential Mitigations

• To gauge the quality of current support, speaking with a wide range of existing franchisees is a valuable step.
• A business advisor can help you assess whether the franchisor’s support infrastructure is appropriate for the system’s size and needs.
• Your accountant should review the franchisor's financial statements to confirm they have the resources to sustain their support obligations.

Explanation

This risk was not identified. Batteries Plus has been in business since 1988 and has been franchising since 1996. With over 700 total stores, the system is mature and well-established, not new or unproven. The management team described in Item 2 also shows significant experience in the industry. Therefore, the risks associated with an emerging franchise concept do not appear to be present here.

Potential Mitigations

• With your business advisor, you should still evaluate the experience of the current management team to ensure it aligns with the system's future goals.
• Speaking with long-tenured franchisees can provide valuable insight into the system's evolution and stability over time.
• An accountant can review the historical financial performance in Item 21 to confirm the system's long-term viability.

Explanation

This risk appears to be low. The core business of selling batteries, light bulbs, and offering device repair services addresses established and ongoing consumer and commercial needs rather than a fleeting trend. The business has operated since 1988, demonstrating long-term market presence. While technology evolves, the fundamental need for power sources and device repair seems likely to persist, reducing the risk of the business being a short-term fad.

Potential Mitigations

• It is prudent to have a business advisor help you research the long-term market demand for the core products and services in your specific area.
• Discuss the franchisor's strategy for adapting to new technologies, such as advancements in battery tech or new electronic devices, with your advisor.
• Reviewing the franchisor's history of innovation and system evolution with existing franchisees can provide insight into their adaptability.

Explanation

This risk was not identified. Item 2 details the backgrounds of the executive team. Many key personnel, including the Chief Technology Officer and Chief Operating Officer, have been with the company for many years. Newer executives appear to have relevant senior-level experience from other large companies. Overall, the management team does not appear to lack experience in operating this type of business or managing a large franchise system.

Potential Mitigations

• A business advisor can help you review the biographies of the management team to assess their collective experience and tenure.
• When speaking with current franchisees, you can inquire about their perception of the management team's competence and support.
• Understanding the strategic vision of the current leadership team is a worthwhile discussion to have with the franchisor.

Explanation

This risk was not identified. The FDD discloses the parent companies, including Square Brands International, LLC and the ultimate parent controlled by Freeman Spogli & Co. As the franchisor, Batteries Plus, LLC, has provided its own audited financial statements showing significant financial strength, the financials of the parent are not required for disclosure under the FTC Rule. The provided financials appear sufficient to assess the entity with which you will contract.

Potential Mitigations

• An attorney can confirm whether the disclosure of parent companies and their financial information meets all federal and state requirements.
• Your accountant should review the provided franchisor financials to ensure they are sufficient for your due diligence.
• Understanding the full corporate structure and any guarantees from parent companies is a wise step to take with your legal counsel.

Explanation

This risk was not identified. Item 1 of the FDD states, "We have no predecessors required to be disclosed in this Item." This indicates that the current franchising entity, Batteries Plus, L.L.C., did not acquire the system's assets from a prior company that franchised the same concept. Therefore, there are no predecessor litigation, bankruptcy, or franchisee turnover histories to consider, which simplifies due diligence.

Potential Mitigations

• You should have your attorney verify the franchisor's statement regarding predecessors and corporate history.
• A business advisor can help you research the company's long operational history to ensure no other entities were involved in franchising the brand.
• Speaking with long-tenured franchisees can help confirm the corporate history they have experienced.