Explanation

This specific risk was not identified in the FDD package. Item 20 data shows low franchisee turnover, with only three terminations in 2024 out of a base of 103 outlets. High turnover can be a major red flag indicating systemic problems like unprofitability or poor franchisor support. It is crucial to analyze these figures to gauge franchisee satisfaction and system health.

Potential Mitigations

• Your accountant should always calculate the turnover rate from Item 20 data over a three-year period to identify any negative trends.
• Speaking with former franchisees listed in the FDD is a critical step your business advisor can help you prepare for.
• An attorney can help you understand the definitions the franchisor uses for categories like 'terminations' versus 'transfers'.

Explanation

This specific risk was not identified in the FDD package. The business operates in the contents restoration industry, providing services after events like fires and floods. This is an established, needs-based service sector, not a business model based on a short-term trend or fad. Therefore, the risk of the core business becoming obsolete due to shifting consumer tastes appears low.

Potential Mitigations

• Your business advisor can help you research the long-term stability and competitive landscape of the restoration services industry.
• Always consider how technological changes or environmental factors might impact any industry over the long term.
• An accountant can help you model the business's resilience to economic downturns.

Explanation

This specific risk was not identified in the FDD package. The executive team, as detailed in Item 2, possesses extensive and long-term experience within the restoration industry and with other established franchise brands under the BELFOR Franchise Group umbrella. This depth of relevant industry and franchising experience suggests a strong leadership foundation and may mitigate risks associated with operational and strategic management.

Potential Mitigations

• A business advisor can help you verify the backgrounds of key executives and assess their reputation within the franchise community.
• You should still ask current franchisees about their direct experiences and the quality of support received from the leadership team.
• Your attorney can advise on the stability of the management team and any recent key personnel changes.

Explanation

This specific risk was not identified in the FDD package. The franchisor clearly discloses its parent companies and, most importantly, provides the audited financial statements for the ultimate parent and guarantor, BFG Holdco, Inc. This provides critical transparency into the financial health of the entity backing the franchisor's obligations.

Potential Mitigations

• Your accountant should always confirm that the financials provided are for the correct entity guaranteeing the franchisor's obligations.
• An attorney can help you verify the corporate structure and the legal relationship between the franchisor and its parent companies.
• Always ensure that any financial guarantee from a parent company is a formal, legally binding document.

Explanation

This specific risk was not identified in the FDD package. The franchisor discloses a predecessor, O'Donnell Brothers' Professional Furniture Service Inc., and its acquisition by the parent company. Item 3 and 4 disclose no litigation or bankruptcy history for the predecessor. While history is always a point for due diligence, no specific issues are raised from the disclosure itself.

Potential Mitigations

• A business advisor can help you research the history and reputation of any predecessor companies mentioned in the FDD.
• It is wise to ask long-tenured franchisees or employees about their experiences under any prior ownership.
• Your attorney should review the asset purchase agreements if available to understand any liabilities that may have been assumed from a predecessor.

Explanation

This specific risk was not identified in the FDD package. Item 3 of the FDD explicitly states, 'No litigation is required to be disclosed in this Item.' The absence of disclosed lawsuits against the franchisor alleging fraud, misrepresentation, or franchise law violations is a positive indicator, though it does not eliminate all potential for future disputes.

Potential Mitigations

• Your attorney can conduct independent searches for litigation that may not have met the specific disclosure thresholds for Item 3.
• Always discuss the franchisor's dispute resolution history with a range of current and former franchisees.
• Maintaining open communication with the franchisor can help prevent disputes from escalating to litigation.