Explanation

This specific risk was not identified in the FDD Package. The franchisor's audited financial statements do not appear to show signs of financial instability such as a 'going concern' note, negative net worth, or significant operating losses. Strong financials are important as they suggest the franchisor has the resources to support its franchisees and grow the brand.

Potential Mitigations

• An experienced franchise accountant should still conduct a thorough review of the franchisor’s financial statements, including all footnotes and revenue sources.
• Discussing the company's financial health and capitalization with your financial advisor can provide additional perspective.
• It is wise to ask your attorney about any state-mandated financial assurances, like bonds or escrow, that might be in place.

Explanation

This specific risk was not identified in the FDD Package. The data in Item 20 shows a system that is contracting, not growing rapidly. While rapid growth can strain a franchisor's support systems, that does not appear to be the current risk here. Instead, the focus should be on the reasons for the recent decline in the number of outlets.

Potential Mitigations

• A business advisor can help you analyze the system's growth trajectory and what it implies for long-term brand health.
• Engaging with your accountant to review the franchisor's financial capacity to support its existing franchisees is a prudent step.
• Your attorney should review the franchisor's contractual obligations for support to ensure they are adequate regardless of system size.

Explanation

This specific risk was not identified in the FDD Package. Canine Dimensions Franchising, LLC (Canine Dimensions LLC) began offering franchises in January 2008, according to Item 1. A system with over a decade of franchising history is generally not considered new or unproven, though its recent performance and high turnover present a different set of risks that require careful evaluation.

Potential Mitigations

• Speaking with long-term franchisees about the evolution of the system and brand can provide valuable historical context.
• Your business advisor can help you research the brand's reputation and history in the marketplace.
• An accountant should still analyze the company's financial statements for long-term trends and stability.

Explanation

This specific risk was not identified in the FDD Package. The business of in-home dog training is a well-established service industry and does not appear to be based on a short-term trend or fad. The long-term success of such a business generally depends more on service quality and market demand rather than fleeting consumer interests.

Potential Mitigations

• A business advisor can assist you in researching the long-term demand and competitive landscape for pet services in your local market.
• Discussing the sustainability of the business model with a financial advisor can help you assess its resilience to economic changes.
• Reviewing the franchisor's plans for service innovation and adaptation in Item 11 with your attorney is also recommended.

Explanation

This specific risk was not identified in the FDD Package. Item 2 indicates that the key executive, Philip J. Guida, has been with the company since its inception in 2007 and has been involved in the industry since 1994. This suggests a management team with significant experience in both the specific industry and in franchising. However, the high franchisee turnover rate may raise questions about management effectiveness.

Potential Mitigations

• It is still beneficial to discuss the management team's track record and reputation with current and former franchisees.
• A business advisor can help you research the backgrounds of the key individuals listed in Item 2.
• Posing questions to the franchisor about their management philosophy and franchisee relations strategy is a useful exercise.

Explanation

This specific risk was not identified in the FDD Package. Item 1 does not indicate that the franchisor is owned by a private equity firm or similar investment group. The documents suggest it is privately owned by its founder. This avoids risks often associated with PE ownership, such as a focus on short-term returns over long-term system health.

Potential Mitigations

• Your attorney should confirm the ownership structure of the franchisor entity.
• Discussing the company's long-term vision with the franchisor can provide insight into their strategic priorities.
• A review of any clauses related to the sale or assignment of the franchise system with your attorney is always a good practice.

Explanation

This specific risk was not identified in the FDD Package. The FDD discloses an affiliate in Item 1 but does not mention a parent company. The relationship between the franchisor and its affiliate, which owns the intellectual property, seems to be clearly disclosed. There is no indication of a controlling parent company whose financials or identity are being withheld.

Potential Mitigations

• Your attorney can help verify the corporate structure and the relationship between the franchisor and any affiliated entities.
• An accountant should review the financial statements to ensure all relevant related-party transactions are properly disclosed.
• Understanding the specific roles and obligations of each disclosed affiliate is important; ask your attorney for clarification.

Explanation

This specific risk was not identified in the FDD Package. Item 1 describes the franchisor's history and its formation in 2007, as well as the history of its affiliate and principal. No predecessors in the sense of a prior entity selling the same franchise are disclosed, and no negative history associated with a predecessor is mentioned in Items 3 or 4.

Potential Mitigations

• It is still prudent for your attorney to review Item 1 carefully for any mention of acquired assets or previous business names.
• Asking long-term franchisees about the history of the system can sometimes uncover information not detailed in the FDD.
• A business advisor can assist in performing public records searches on the franchisor and its principals to verify their history.

Explanation

This specific risk was not identified in the FDD Package. Item 3 explicitly states, 'No litigation is required to be disclosed in this Item.' This indicates there have not been any recent, material legal actions involving the franchisor that meet the FTC's disclosure requirements, which is a positive sign. However, the high franchisee turnover rate could suggest dissatisfaction that has not yet resulted in litigation.

Potential Mitigations

• Your attorney can conduct independent searches for litigation that may not have met the threshold for disclosure in Item 3.
• It is critical to ask former franchisees about any disputes they had with the franchisor, whether or not they led to litigation.
• Careful review of the dispute resolution clauses in the Franchise Agreement with your attorney remains important.