Explanation

This risk was not identified in the FDD package because the franchise system is new and has no operating or former franchisees, as shown in Item 20. While this means there is no history of high turnover, the complete lack of an operating track record with franchisees is itself a significant risk, which is addressed under the "New/Unproven Franchise System" risk.

Potential Mitigations

• Your business advisor should help you understand that with a new system, you will be one of the first to test the business model and support structure.
• It is crucial to have your accountant help you build conservative financial projections, as there is no franchisee performance data to rely on.
• Consult with your attorney about negotiating more protective terms in the franchise agreement to offset the risks of being an early adopter.

Explanation

This risk was not identified in the FDD package. As a new franchisor with no existing franchised outlets reported in Item 20, there is no history of rapid system growth. The risk lies more with the unproven nature of the system rather than with strained resources from over-expansion. Future rapid growth could become a concern if the franchisor prioritizes sales over support.

Potential Mitigations

• Discuss the franchisor's long-term growth and support infrastructure plans with your business advisor to gauge their preparedness for future expansion.
• Your accountant can help assess if the franchisor has a realistic financial plan to scale support services as the system grows.
• Have your attorney review the franchisor's contractual support obligations to ensure they are clearly defined.

Explanation

This risk was not identified in the FDD package. The automotive repair industry is a long-established and essential service sector with sustained consumer demand. The business concept is not based on a fleeting trend or novelty, which reduces the risk of the business model becoming obsolete due to shifting consumer interests. This is a positive factor for long-term viability.

Potential Mitigations

• Engage a business advisor to research the specific competitive landscape for auto repair in your local market.
• Your accountant can help you analyze how economic cycles might affect demand for automotive services.
• Discuss with your attorney how the franchise agreement allows you to adapt services to future changes in automotive technology.

Explanation

This risk was not identified in the FDD package. Item 1 of the FDD does not indicate that the franchisor is owned or controlled by a private equity firm. The ownership structure appears to be a standard limited liability company without the involvement of institutional investors whose strategies might prioritize short-term returns over the long-term health of the franchise system.

Potential Mitigations

• It is still prudent to have your attorney verify the ownership structure detailed in Item 1 through public record searches.
• A business advisor can help you understand the pros and cons of different franchisor ownership structures.
• Always ask your attorney to review the assignment clause in the franchise agreement to understand what happens if the franchisor is sold in the future.

Explanation

This risk was not identified in the FDD package. Item 1 clearly states that CDP LLC does not have a parent company. The franchisor has disclosed an affiliate, Car Doctor Plus LLC, and its role, so there does not appear to be an attempt to obscure the corporate structure. Therefore, the risk of hidden liabilities or instability from an undisclosed parent entity is not present.

Potential Mitigations

• Your attorney can confirm the company's standalone status through a corporate records search.
• It's good practice for your accountant to review the financial statements of any disclosed affiliates if they play a critical role, such as being a key supplier.
• A business advisor can help you evaluate the relationship and dependencies between the franchisor and any of its affiliates.

Explanation

This risk was not identified in the FDD package. Item 1 states that the franchisor does not have a predecessor. The company is a new entity established to launch this franchise system. Therefore, there is no risk of inheriting historical problems, litigation, or a negative track record from a previous version of the company. The risks associated with this franchise are those of a new venture, not a rebranded one.

Potential Mitigations

• Your attorney should confirm the newness of the entity and the absence of any asset acquisitions that might functionally constitute a predecessor.
• With a business advisor, focus due diligence on the experience of the management team and the viability of the new business model.
• An accountant should analyze the startup financials provided, given there is no historical performance to review.

Explanation

This risk was not identified in the FDD package. As a new company that has not yet sold any franchises, Item 3 of the FDD indicates there is no history of litigation with franchisees, government agencies, or other parties. While this is positive, it provides no track record of how the franchisor handles disputes. The absence of litigation is expected for a new system.

Potential Mitigations

• Your attorney should still perform a public records search to confirm the absence of any litigation involving the franchisor or its principals.
• Review the dispute resolution clauses in the franchise agreement carefully with your attorney, as this will be the primary guide for how future conflicts are handled.
• Discuss with a business advisor the importance of establishing a clear and positive communication channel with a new franchisor from the outset.