Explanation

This risk was not identified. The financial statements in Item 21 indicate Gosh Enterprises, Inc. (GEI) is profitable, with strong growth in revenue and shareholder equity. A financially healthy franchisor is important as it suggests the company has the resources to support its franchisees, invest in the brand, and fulfill its contractual obligations.

Potential Mitigations

• It is still advisable for your accountant to review the complete financial statements, including all footnotes, to form an independent opinion of financial health.
• A business advisor can help you assess if the franchisor's growth and profitability appear sustainable over the long term.
• Your attorney should confirm if any financial performance guarantees are offered by a parent company, although none are indicated here.

Explanation

This risk was not identified in the FDD. The data presented in Item 20 over the last three years shows a low percentage of franchisee terminations, non-renewals, and other cessations relative to the total number of operating units. A low turnover rate can be an indicator of a generally stable and satisfied franchisee base.

Potential Mitigations

• To gain a deeper insight into franchisee satisfaction, contacting a sample of current and former franchisees listed in the FDD is a critical due diligence step.
• When speaking with former franchisees, your business advisor can help you ask targeted questions about their specific reasons for leaving the system.
• Your attorney should still review the termination and non-renewal clauses in Item 17 to understand your rights and obligations.

Explanation

Item 20 data reveals the system has been growing steadily, adding a significant number of franchised units over the past three years. While growth is often positive, very rapid expansion can sometimes strain a franchisor's ability to provide adequate and timely support, training, and site selection assistance to all new franchisees. You should verify that support systems have scaled with unit growth.

Potential Mitigations

• Inquire with the franchisor about how their support infrastructure, including the number of field consultants, has grown in relation to the number of new units.
• A business advisor should help you ask a range of new and established franchisees about the current quality and responsiveness of franchisor support.
• Your accountant can review the financials in Item 21 to assess if GEI is reinvesting sufficiently in its support systems.

Explanation

This risk was not identified. Gosh Enterprises, Inc. (GEI) has an extensive operating history, having offered franchises since 1990, as stated in Item 1. A long history suggests the business model is established and has endured various economic cycles. The system has a substantial number of operational units, indicating a proven concept rather than a new or untested one.

Potential Mitigations

• Even with a proven system, it is wise to have your business advisor help you contact franchisees who have been in the system for different lengths of time.
• An accountant should review the financial statements in Item 21 to confirm a history of stable operational performance.
• Your attorney should review the full FDD package for any recent major changes to the business model that could introduce new risks.

Explanation

This risk does not appear to be present. The Charleys concept, focused on Philadelphia-style cheesesteaks and related items, has been in operation since 1986 and franchising since 1990. Its long history and large number of units across diverse locations suggest it is an established concept with sustained consumer demand rather than a temporary or niche fad.

Potential Mitigations

• A business advisor can help you research the long-term consumer trends in the quick-service restaurant segment to confirm the concept's ongoing relevance.
• In discussions with franchisees, inquire about local market adaptability and how the menu has evolved over time.
• Review Item 11 with your attorney to understand the franchisor's stated commitments to research, development, and system evolution.

Explanation

This risk was not identified. Item 2 shows that the key executives of Gosh Enterprises, Inc. (GEI) possess extensive experience both within the company and in the broader restaurant and franchise industries. The founder has been leading the company since its inception. This level of management experience is important as it suggests a deep understanding of the business operations and the franchise model.

Potential Mitigations

• It is still valuable to have a business advisor help you research the public reputation and track record of the key executives mentioned in Item 2.
• When speaking with current franchisees, inquire about their perception of the management team's competence and support.
• Your attorney can review Item 3 to confirm the absence of litigation involving the management team that might raise concerns.

Explanation

This risk was not identified. Item 1 of the FDD does not indicate that the franchisor, Gosh Enterprises, Inc. (GEI), is owned by a private equity firm. The company appears to be privately held by its founder. This is relevant because ownership structure can influence the franchisor's priorities and long-term strategic direction.

Potential Mitigations

• As part of due diligence, your attorney can verify the corporate ownership structure to confirm there are no undisclosed controlling entities.
• Inquire with long-tenured franchisees about the consistency of the franchisor's culture and strategic focus over the years.
• Reviewing the assignment clauses in Item 17 with your attorney is still important to understand what happens if the company is sold in the future.

Explanation

This risk was not identified in the FDD. Item 1 clearly discloses the parent and affiliate structure, and the Item 21 financial statements for the franchisor, Gosh Enterprises, Inc. (GEI), are provided and appear robust. There is no indication that a parent company's financials are required but have been withheld, ensuring a clear view of the entity you are contracting with.

Potential Mitigations

• Your attorney should still review the affiliate relationships described in Item 1 to understand any potential conflicts of interest or dependencies.
• An accountant should confirm that the provided financial statements are for the correct legal entity offering the franchise.
• Inquire with your attorney about the nature of any guarantees between the parent, affiliates, and the franchisor.

Explanation

This risk was not identified. The FDD states in Item 1 that Gosh Enterprises, Inc. (GEI) does not have a predecessor in the legal sense of having acquired the system from another entity. The document traces the history back to the founder's original sole proprietorship. This provides a clear and consistent history for the franchise system under the same leadership.

Potential Mitigations

• It is still good practice for your attorney to confirm the corporate history through public records.
• When speaking with long-term franchisees, a business advisor can help you ask about the history and evolution of the brand.
• Reviewing Items 3 and 4 with your accountant is still important to ensure no litigation or bankruptcy history is associated with the founding entities.

Explanation

This risk was not identified. Item 3 of the FDD states, "No litigation is required to be disclosed in this Item." The absence of a pattern of lawsuits, especially those from franchisees alleging fraud or misrepresentation, is a positive indicator. It suggests a lower likelihood of systemic issues in the franchisor's sales process or franchisee relations.

Potential Mitigations

• Your attorney can still conduct independent searches for litigation involving the franchisor that may not have met the criteria for disclosure in Item 3.
• Discussing any past or current disputes with a range of franchisees is a vital part of due diligence, which a business advisor can guide.
• Carefully reviewing the dispute resolution clauses in Item 17 with your attorney will help you understand the process if a conflict does arise.