Explanation

This risk was not identified in the FDD package. Item 20 data shows the BWW-GO system is new and growing rapidly, with very few cessations and no reported terminations or non-renewals. In franchising, high franchisee turnover can be a significant red flag, often indicating systemic problems like a lack of profitability, poor site selection, or inadequate support from the franchisor, all of which could negatively impact your potential for success.

Potential Mitigations

• Speaking with a range of current and former franchisees listed in the FDD is a valuable way to understand their satisfaction and reasons for leaving.
• Engaging a business advisor can help you analyze the Item 20 data for any concerning trends as the system matures.
• An accountant should help you review the franchisor's financials to see if they can support the growing system.

Explanation

This risk was not identified. Item 2 of the FDD shows that the management team is composed of executives with extensive experience within Inspire Brands and its various large, established franchise systems like Buffalo Wild Wings, Dunkin', and Arby's. In franchising, inexperienced management can pose a significant risk, as they may lack the expertise to provide adequate support and strategic direction for a new or growing system.

Potential Mitigations

• It is still prudent to review the biographical details in Item 2 with a business advisor to understand the management team's specific roles.
• When speaking with current franchisees, you can inquire about their direct experiences with the management team's competence and support.
• Legal counsel can help you verify the corporate structure and the relationship between the brand's management and the parent company.

Explanation

This risk was not identified. The FDD clearly discloses the relationship with its parent companies, Buffalo Wild Wings, Inc. and Inspire Brands, Inc., and includes the parent's audited financial statements and a guarantee of performance. In some franchise systems, a failure to disclose a controlling parent or its financials can obscure the true financial backing and stability of the franchisor, creating hidden risks for the franchisee.

Potential Mitigations

• It is always good practice for your attorney to verify the corporate structure and the legal entities involved in the franchise offer.
• An accountant should confirm that the financial statements provided are for the correct entity and meet all disclosure requirements.
• Your business advisor can help you understand the roles and influence of the different parent and affiliate companies.

Explanation

This risk was not identified, as the franchisor states in Item 1 that it has no predecessors for the BWW-GO system. When a franchise system has been acquired from a previous owner, it is crucial to review the predecessor's history for any signs of trouble, such as high franchisee turnover or litigation, as these issues could carry over to the new ownership and affect your business.

Potential Mitigations

• You should always confirm with your attorney that the "no predecessor" statement is accurate based on the FDD's description of the business history.
• A business advisor can help you research the history of the parent brand, Buffalo Wild Wings, to understand its general track record.
• When speaking with franchisees, it can be useful to ask about the history of the brand and concept to uncover any unstated lineage.

Explanation

Item 3 discloses two settled consumer class-action lawsuits and one pending consumer class-action. It does not, however, disclose any litigation initiated by franchisees against the franchisor alleging fraud, misrepresentation, or breach of contract. While any litigation warrants review, the absence of franchisee-initiated lawsuits against BWW International for this concept is a positive sign. A pattern of such suits against a franchisor would be a major red flag.

Potential Mitigations

• Your franchise attorney should review the details of the disclosed litigation to assess any potential impact on the business operations or brand reputation.
• You can ask the franchisor for more context on the consumer lawsuits and the business practices that were involved.
• It is valuable to discuss with current franchisees whether they are aware of any significant or systemic disputes within the franchise system.