Explanation

This risk was not identified. The FDD's Item 20 tables show a pattern of steady, manageable growth in the number of franchised outlets over the last three years, rather than an explosive expansion that might strain the franchisor's support systems. A franchisor growing too quickly can sometimes fail to provide adequate support to its new and existing franchisees.

Potential Mitigations

• You should still discuss the franchisor's growth plans and support infrastructure capacity with your business advisor.
• Ask existing franchisees about their perception of the quality and timeliness of the support they currently receive from the franchisor.
• An accountant can help review Item 21 financials to confirm that the franchisor has allocated sufficient resources for franchisee support.

Explanation

This risk was not identified. Bojangles is a well-established brand that has been in operation since 1977 and has a long history of franchising. The system includes a large number of both company-owned and franchised restaurants, indicating a mature and proven business concept rather than a new or untested one. A new system carries higher risks due to unproven operations and support.

Potential Mitigations

• A business advisor can help you research the brand's long-term history and its competitive position in the quick-service restaurant industry.
• When speaking with franchisees, it may be useful to ask about the evolution of the brand and support systems over time.
• An attorney can still review the franchisor's corporate history in Item 1 for any relevant details about its predecessors.

Explanation

This risk was not identified. The Bojangles concept, centered on fried chicken and biscuits, is part of a long-established segment of the quick-service restaurant industry. It does not appear to be based on a short-term trend or fad. Investing in a fad business is risky because customer interest may decline, but your long-term contractual obligations would remain.

Potential Mitigations

• Engaging a business advisor to research the long-term consumer demand and competitive landscape for this type of restaurant is still a prudent step.
• Discuss with the franchisor their strategies for menu innovation and brand evolution to stay relevant over the next 20 years.
• You should confirm with your financial advisor that the business model appears sustainable through various economic cycles.

Explanation

This risk was not identified. The executive team described in Item 2 has extensive and relevant experience in the restaurant and franchise industries. Key personnel have prior management experience at major brands such as KFC, Arby's, CKE Restaurants, and Panera. This level of experience suggests a strong capacity to manage the franchise system effectively. Inexperienced management can be a significant risk in a franchise system.

Potential Mitigations

• Your business advisor can help you review the backgrounds of the key executives listed in Item 2.
• When speaking with current franchisees, you might ask about their direct experiences and the quality of support received from the management team.
• It can be beneficial to research the recent performance of other brands where these executives previously held key roles.

Explanation

This risk was not identified. The FDD clearly discloses the parent company structure, including Walker Parent, Inc., and its affiliates. Furthermore, the franchisor has included the full audited consolidated financial statements for the parent company in Exhibit N. Full transparency in this area allows you and your advisors to assess the financial health of the entire organization, which is crucial for due diligence.

Potential Mitigations

• It is important that your accountant reviews the parent company's financials in addition to the franchisor's statements.
• Your attorney can confirm there are no other undisclosed parent entities that might influence the franchise relationship.
• A business advisor can help you understand the relationships between the various affiliated entities described in Item 1.

Explanation

This risk was not identified. Item 1 of the FDD provides a clear history of the franchisor's predecessors, including Bojangles' International, LLC (BIL) and Bojangles' Restaurants, Inc. (BRI). The document also discloses relevant litigation involving these predecessors in Item 3. While there are issues with the predecessors, the disclosure itself appears adequate, rather than attempting to obscure a negative history.

Potential Mitigations

• Have your attorney review the predecessor history and any associated litigation to ensure you understand the system's background.
• When speaking with long-term franchisees, you could inquire about their experiences under previous ownership structures.
• Your business advisor can help you research the public history of the brand under its prior ownership.