Explanation

This risk was not identified. The data in Item 20 for the past three years does not indicate an unusually high rate of franchise terminations, non-renewals, or units ceasing operations for other reasons relative to the system's size. High turnover can be a major red flag, potentially signaling systemic problems like unprofitability, franchisee dissatisfaction, or poor support. A stable and growing franchise system is generally a positive indicator for prospective franchisees.

Potential Mitigations

• Speaking with a diverse group of current and former franchisees from the list in Item 20 is a crucial step to verify the reasons for any turnover.
• A business advisor can help you analyze the Item 20 tables to calculate annual turnover rates for comparison against industry averages.
• Your franchise attorney can help you frame questions for the franchisor about the circumstances surrounding any past unit closures or transfers.

Explanation

The franchise system shows steady, but not alarmingly rapid, growth in the number of outlets over the past three years. While rapid expansion can sometimes strain a franchisor's ability to provide adequate support, the growth rate presented in Item 20 appears manageable. This suggests the franchisor may be able to scale its support systems effectively to meet the needs of new franchisees, though this is not guaranteed.

Potential Mitigations

• Asking current franchisees about their experience with the quality and timeliness of franchisor support is a valuable due diligence step.
• Your business advisor can help you question the franchisor about their infrastructure and staffing plans for supporting continued growth.
• An accountant should review the franchisor's financials to assess if they are reinvesting sufficiently in support systems.

Explanation

This risk was not identified. Camp Bow Wow has a long operational history, beginning operations in 2003 and franchising since 2004. The FDD provides extensive data on system size and history, including information on its predecessor. Therefore, this is not considered a new or unproven system. Investing in an established system can reduce certain risks associated with unproven business models or a lack of brand recognition.

Potential Mitigations

• A business advisor can help you analyze the system's long-term growth and performance trends using the data in Item 20.
• It is still wise to speak with long-tenured franchisees to understand how the system has evolved and adapted over time.
• Your attorney should review the history of the franchisor and its predecessors as detailed in Item 1.

Explanation

The pet care industry, particularly services like dog daycare and boarding, has shown sustained consumer demand over many years. The business model is not tied to a short-term trend or novelty product. While subject to economic fluctuations, the core service addresses a long-term need for pet owners. Therefore, this business does not appear to be a fad, which reduces the risk of a sudden collapse in consumer interest.

Potential Mitigations

• A business advisor can help you research the long-term outlook and competitive landscape for the pet care industry in your local market.
• Discussing the business's resilience during different economic cycles with long-term franchisees can provide valuable insight.
• Your financial advisor can help you assess the long-term viability of the business model in your financial planning.

Explanation

This risk was not identified. While there was a recent change in ownership to Propelled Brands in 2024, the new management team, as detailed in Item 2, has extensive experience in managing other large franchise systems, such as FASTSIGNS. This suggests that while the management is new to the CBW brand specifically, they possess significant relevant experience in the franchising sector, which can be a positive factor for system management and support.

Potential Mitigations

• A business advisor can help you research the track record of the new management team and their performance with other franchise brands.
• Asking current franchisees about their perception of the new management team and any changes in support since the acquisition is important.
• Your attorney can help you understand the implications of the new ownership structure detailed in Item 1.

Explanation

The FDD discloses that Propelled Brands is the parent company and provides its audited consolidated financial statements, which cover multiple franchise brands. Propelled Brands also provides a Guarantee of Performance for CBW's obligations. This transparency reduces the risk of an undisclosed parent company. However, because the financials are consolidated, it is difficult to isolate the specific financial health or performance of the CBW brand alone, which is a key limitation.

Potential Mitigations

• An accountant should review the consolidated financials, noting that they represent the entire multi-brand holding company, not just CBW.
• Your attorney should analyze the terms of the parent company's Guarantee of Performance to understand the extent of the protection it offers.
• In discussions with the franchisor, it's advisable to ask specific questions about the financial performance and resource allocation for the CBW brand.

Explanation

The FDD discloses a predecessor, D.O.G. Development LLC, and provides details of litigation involving that entity. In one case, a former franchisee under the predecessor brought a counterclaim alleging material misrepresentation. While the franchisor ultimately prevailed or settled favorably, the existence of such claims in the system's history is a relevant fact. It suggests that you should perform careful due diligence regarding sales representations and franchisee satisfaction.

Potential Mitigations

• Your attorney should carefully review the information provided about the predecessor in Items 1 and 3.
• It is advisable to ask the franchisor for more context regarding the historical litigation involving its predecessor.
• Speaking with long-term franchisees who were in the system under the predecessor could provide valuable historical perspective.