Explanation

This risk was not identified. The data in Item 20's tables indicates a low rate of franchisee terminations, non-renewals, and other cessations of business over the past three years. High franchisee turnover can be a major red flag, potentially signaling systemic issues such as lack of profitability, poor franchisor support, or an unsustainable business model. A stable and growing franchise system is generally a positive indicator for prospective franchisees.

Potential Mitigations

• Even with low reported turnover, it is wise to have your attorney help you formulate questions for current and former franchisees about their satisfaction.
• Engaging a business advisor to analyze the growth and transfer data in Item 20 can provide deeper insight into system health.
• An accountant can help you compare the system's growth trajectory against its financial capacity to support new units.

Explanation

This risk was not identified. British Swim School Franchising, LLC (BSSF) and its predecessor have been in business for many years, with franchise operations beginning in 2011. The system has a substantial number of operating units. For a truly new system, risks include an unproven business model, minimal brand recognition, and a lack of experienced support staff, which can increase the potential for business failure. This franchisor, however, appears to have an established operational history.

Potential Mitigations

• For any franchise system, it is prudent for your business advisor to research the brand's history and its competitive position in the market.
• You should always ask an attorney to review the business experience of the current management team as described in Item 2.
• Speaking with the longest-operating franchisees can provide valuable perspective on the system's evolution and stability.

Explanation

This risk was not identified. The business of providing swimming and water-survival lessons, particularly for children, is a well-established service industry with consistent, long-term demand. While market trends can shift, this business model does not appear to be based on a short-lived fad. A fad-based business carries a high risk of failure once consumer interest wanes, potentially leaving you with long-term contractual obligations for a business with a collapsed market.

Potential Mitigations

• A business advisor can help you research the long-term demand and competitive landscape for children's swim instruction in your local market.
• It is still wise to ask the franchisor about their plans for innovation and adapting their curriculum and services to stay competitive.
• An accountant can help you model the financial viability of the business under different market scenarios.

Explanation

This risk was not identified. FDD Item 2 describes a management team with extensive experience in the franchise industry and with the British Swim School brand or its parent company, Buzz Franchise Brands. Inexperienced management can be a significant risk, as it may lead to inadequate franchisee support, poor strategic decisions, and underdeveloped operational systems. The disclosed experience of the leadership team appears to be a positive factor for this franchise system.

Potential Mitigations

• It is still beneficial to discuss the management team's reputation and effectiveness with current and former franchisees.
• Your business advisor can help you research the professional backgrounds of the key executives listed in Item 2 for additional context.
• Having your attorney confirm the stability of the management team is a valuable part of due diligence.

Explanation

This risk was not identified. Item 1 clearly discloses the parent company, BSS Acquisition Holdings, LLC, and its parent, Buzz Franchise Brands, LLC. Furthermore, the FDD includes the franchisor's own audited financial statements in Exhibit C. Failure to disclose a parent entity or its financials when the franchisor is a thinly capitalized subsidiary can obscure significant risks about the true financial backing and stability of the system. This FDD appears to meet the disclosure requirements in this regard.

Potential Mitigations

• Your accountant should review the provided financial statements and all footnotes to understand the franchisor's financial health.
• An attorney should analyze the relationship between the franchisor and its parent entities as described in Item 1.
• It is good practice to ask the franchisor about the role the parent company plays in supporting the franchise system.

Explanation

This risk was not identified. Item 1 clearly discloses the predecessor, British Swim Centers Franchising, LLC (BSCF), and notes that BSSF acquired its assets in 2019. The FDD appears to properly incorporate information related to the predecessor's history where required. A failure to disclose or downplaying the history of a predecessor can hide systemic issues, past failures, or litigation that would be material to an investment decision.

Potential Mitigations

• Engaging an attorney to review the disclosures in Items 1, 3, and 4 for any information related to the predecessor is always a good practice.
• It can be insightful to speak with long-term franchisees who operated under the predecessor to understand the transition and any changes.
• A business advisor can help you research the public records of the predecessor company for any additional relevant history.

Explanation

This risk was not identified in the FDD. Item 3 states, "No litigation is required to be disclosed in this Item." A pattern of litigation, particularly franchisee-initiated lawsuits alleging fraud, misrepresentation, or breach of contract, can be a major warning sign of systemic problems within a franchise. The absence of such disclosed litigation is a positive indicator, though it does not guarantee a dispute-free relationship.

Potential Mitigations

• An attorney can conduct independent public record searches for litigation involving the franchisor that may not have met the criteria for disclosure in Item 3.
• Asking current and former franchisees about their experiences with disputes, whether they resulted in litigation or not, provides valuable insight.
• Understanding the dispute resolution process outlined in Item 17 with your lawyer is crucial, even in the absence of disclosed litigation.