Explanation

This risk was not identified in the FDD Package. As a new franchise system that began offering franchises in 2025, there is no history of franchisee turnover reported in Item 20. While this means there are no negative data trends to analyze, it also means there is no track record of franchisee longevity or success within the system. Evaluating the stability and satisfaction level of franchisees is a key part of due diligence.

Potential Mitigations

• Your business advisor can help you monitor franchisee satisfaction and turnover rates as the system grows.
• An attorney can advise on negotiating stronger protections in the event the system shows signs of distress in the future.
• Maintain open communication with other franchisees to stay informed about system-wide health.

Explanation

This risk was not identified in the FDD Package. Item 20 shows only three franchised units opening in the most recent year, which does not indicate overly rapid expansion. It is important in franchising that a franchisor's growth does not outpace its ability to provide adequate support to its franchisees. A system that grows too fast may strain its resources, leading to diminished support, training, and quality control for everyone in the system.

Potential Mitigations

• Your business advisor can help you track the pace of new franchise sales against the franchisor's hiring of support staff.
• Speaking with other franchisees about the quality and timeliness of support as the system expands can provide valuable insight.
• Your accountant should periodically review the franchisor's updated financials to see if they are investing in support infrastructure.

Explanation

This risk was not identified in the FDD Package. The laundry services industry is a well-established market with consistent consumer demand, not typically considered a fad. However, success depends on local competition, market conditions, and operational execution. A prospective franchisee should always evaluate if the specific business model, such as one heavily reliant on a particular technology or service niche, has long-term viability in their chosen market area.

Potential Mitigations

• Your business advisor can help you conduct independent market research to assess the long-term demand for the specific services offered.
• Evaluate the franchisor's plans for innovation and adaptation to stay competitive and relevant over time.
• Consider the business model's resilience to economic downturns with your financial advisor.

Explanation

This risk was not identified in the FDD Package. Item 1 does not indicate that the franchisor is owned by a private equity firm. This type of ownership can sometimes introduce risks related to prioritizing short-term investor returns over the long-term health of the franchise system. Such priorities could manifest as increased fees, reduced franchisee support, or pressure to use affiliated vendors. The absence of this ownership structure can be a positive factor for system stability.

Potential Mitigations

• Your attorney should always confirm the ownership structure disclosed in Item 1 through independent corporate records searches.
• It is good practice to ask the franchisor about their long-term vision and commitment to the brand, which a business advisor can help evaluate.
• Understanding the franchisor's assignment rights in the Franchise Agreement is important, as the system could be sold to any type of owner in the future.

Explanation

This risk was not identified in the FDD Package. The FDD discloses affiliated companies, Bubbly Laundry, LLC and JNJ Laundromat Corp., that operate similar businesses and own the trademarks licensed to the franchisor. However, there is no indication of a parent company whose financials would be material to your investment decision. The franchisor's own audited financials are provided. A failure to disclose a relevant parent company could hide financial instability or other risks.

Potential Mitigations

• Your attorney can verify the franchisor's corporate structure to ensure there are no undisclosed parent entities with significant control.
• An accountant should confirm that if a parent company's guarantee is offered, their financial statements are also provided and reviewed.
• Always clarify the relationships between all affiliated companies mentioned in Item 1 with your business advisor.

Explanation

This risk was not identified in the FDD Package. Bubbly Laundry has no predecessors, as it is a new franchisor that did not acquire its assets or system from a prior company. When a franchisor has a predecessor, it is important to investigate that entity's history, including any past litigation, bankruptcy, or high franchisee turnover. Since there is no predecessor here, this specific risk of an obscured negative history from a prior entity is not applicable.

Potential Mitigations

• Your attorney should always confirm the accuracy of the predecessor information disclosed in Item 1.
• Even without a predecessor, it is wise for a business advisor to research the history and reputation of the franchisor's individual founders.
• When a system is new, due diligence should focus heavily on the experience of the current management team, with guidance from a business advisor.

Explanation

This risk was not identified in the FDD Package. Item 3 states that no litigation is required to be disclosed. This is a positive finding, as a pattern of lawsuits, especially claims of fraud or misrepresentation brought by other franchisees, can be a major red flag. The absence of such litigation suggests a cleaner operating history to date, although this is also a function of the system being new and having very few franchisees.

Potential Mitigations

• Your attorney can conduct independent searches for litigation that may not have been disclosed to verify the information in Item 3.
• It is good practice to ask current franchisees if they are aware of any disputes, even if they haven't resulted in formal litigation.
• A business advisor can help you continue to monitor this area as the franchise system matures.