Explanation

This risk was not identified. Item 20 data does not indicate excessively rapid growth that might outpace the franchisor's support capabilities. Instead, the system has experienced fluctuations, including periods of contraction. In franchising, it is important to assess whether a franchisor's support infrastructure can keep pace with its growth to ensure new and existing franchisees receive adequate assistance and that the brand's quality is maintained during expansion.

Potential Mitigations

• Your business advisor can help you evaluate whether a franchisor's growth plans are sustainable and supported by adequate infrastructure.
• Asking existing franchisees about the quality and timeliness of support during periods of growth should be part of your due diligence, guided by your attorney.
• An accountant should review the franchisor's financials to assess if they have the resources to support future growth plans.

Explanation

This risk was not identified. Captain D's has been franchising since 2000 and operating restaurants for much longer, indicating it is an established and mature brand, not a new or unproven system. When evaluating a franchise, a long operational history can suggest a more stable business model and more developed support systems, though it does not eliminate other risks. This contrasts with emerging systems where the concept and support are less tested.

Potential Mitigations

• When considering any franchise, it is wise to have a business advisor help you assess the maturity and stability of the brand.
• Your attorney can help you verify the franchisor's history as stated in Item 1 of the FDD.
• Consulting with an accountant can help determine if a franchisor's financial stability aligns with its age and size.

Explanation

This risk was not identified. Captain D's operates in the quick-service seafood restaurant sector, a well-established segment of the restaurant industry with a long history of consumer demand. The business model does not appear to be based on a short-term trend or fad. Prospective franchisees should still assess local market competition and long-term consumer tastes for this specific food category, as market preferences can shift over time.

Potential Mitigations

• Engaging a business advisor to research the long-term market demand for the specific product or service is a prudent step.
• Independent market research should be conducted to evaluate the concept's resilience to economic downturns and changing consumer tastes.
• Your financial advisor can help you assess the sustainability of the business model beyond any current trends.

Explanation

This risk was not identified. The executive team described in Item 2 has extensive and long-term experience within the Captain D's system and the broader restaurant industry. Management with relevant, long-term experience can be a positive indicator of stable leadership and a deep understanding of the business and franchisee needs. A prospective franchisee should always review the backgrounds of the key personnel guiding the system.

Potential Mitigations

• It is always recommended to have a business advisor help you research the background and track record of the franchisor's key management team.
• Your attorney can guide you in formulating questions for current franchisees about their confidence in the management team's leadership and strategy.
• Asking the franchisor directly about management's long-term vision for the brand can provide valuable insight.

Explanation

This risk was not identified. Item 1 clearly discloses the complex parent and affiliate structure, including the ultimate private equity owner and the role of Captain D's Enterprises, LLC as the guarantor. Financials for this guarantor entity are provided. Comprehensive disclosure of parent companies is crucial for you to assess the complete corporate structure and identify where financial backing and ultimate control reside.

Potential Mitigations

• Your attorney should always verify the corporate structure disclosed in Item 1, especially if the franchisor is a subsidiary.
• If a parent entity provides a guarantee, it's crucial that your accountant reviews that parent's financial statements.
• A business advisor can help you understand the relationships between the franchisor and its various affiliates and parent companies.

Explanation

This risk was not identified. Item 1 states there have been no predecessors in the last 10 years. For any franchise, understanding the history of who previously ran the system is important as it can reveal inherited challenges or past performance issues that may still affect the brand. A clean predecessor history is generally a positive sign, but does not eliminate other operational or financial risks.

Potential Mitigations

• Your attorney can help you review the predecessor disclosures in Item 1 of any FDD to identify potential historical issues.
• If a system was acquired from a predecessor, a business advisor can help you research the predecessor's public track record.
• Asking long-term franchisees about their experience under any prior ownership is a valuable part of due diligence.

Explanation

This risk was not identified in the FDD. Item 3 states that the franchisor has no current or past litigation that it is required to disclose. While this is positive on its face, it is somewhat unusual for a large, established system. A lack of litigation is generally favorable, as it suggests fewer disputes with franchisees, regulators, or other parties. However, it does not guarantee a conflict-free relationship.

Potential Mitigations

• An attorney should always carefully review the litigation disclosures in Item 3 of any FDD.
• It is wise to conduct independent online searches for news or discussions of any litigation involving the franchisor.
• Asking current and former franchisees about any informal or formal disputes they are aware of can provide additional context.