Explanation

This risk was not identified, as Cool Binz is a new system with only three franchisees, all of whom started in the most recent year. There is no history of franchisee terminations, non-renewals, or closures. While this specific risk is absent, the lack of operating history is itself a significant risk detailed under "New/Unproven Franchise System." It's crucial to monitor franchisee success and turnover rates as the system grows to gauge its health and viability.

Potential Mitigations

• It is important to have your business advisor help you analyze Item 20 tables in any FDD to calculate the annual turnover rate.
• Engaging an attorney to help you formulate questions for former franchisees is a key part of due diligence.
• An accountant can help you compare a system's turnover rate against available industry benchmarks to assess its relative stability.

Explanation

This risk was not identified in the FDD package. The business of leasing portable storage containers is a well-established industry with sustained demand and is not dependent on a short-term trend or fad. While the franchisor offers specific products like climate-controlled units, the core service addresses a fundamental market need for temporary storage solutions, suggesting long-term viability. Assessing a concept's staying power is crucial to avoid investing in a business with a limited lifespan.

Potential Mitigations

• A business advisor can help you research the long-term demand and competitive landscape for any franchise concept's products or services.
• Asking an attorney to review the franchise agreement term is important, as you are obligated for the full term even if demand for the product fades.
• Your accountant can help model the financial impact of potential declines in consumer trends on the business's profitability.

Explanation

This risk was not identified. Item 2 indicates that the key personnel of Cool Binz have direct experience from the predecessor company and are also part of the larger, well-established BELFOR Franchise Group. This suggests that while the Cool Binz franchisor entity itself is new, its management has relevant experience in both the portable storage industry and in managing franchise systems, which is a positive factor.

Potential Mitigations

• A business advisor can help you vet the backgrounds of the key executives listed in Item 2 for relevant industry and franchise management experience.
• It's a good practice to ask existing franchisees about their direct experiences with the management team's competence and support.
• You should confirm with your attorney that the key personnel mentioned are contractually obligated to remain with the franchisor for a reasonable period.

Explanation

This risk was not identified. Item 1 clearly discloses the parent and guarantor structure, leading up through BELFOR Franchise Group to BFG Holdco, Inc. Furthermore, the FDD package includes the audited financial statements for the guarantor, BFG Holdco, Inc., in Exhibit B. This level of disclosure appears to meet regulatory requirements and provides transparency into the financial backing of the franchisor.

Potential Mitigations

• An attorney should always verify that the FDD properly discloses parent companies, especially if the franchisor is a new or thinly capitalized entity.
• If a parent company guarantees the franchisor's performance, it is critical that your accountant reviews the parent's financial statements.
• It is wise to ask your business advisor to research the relationship and dependencies between the franchisor and its parent.

Explanation

This risk appears to be low. The FDD discloses that the franchisor's affiliate acquired the assets of a predecessor, Cool-Binz, LLC of Florida, in 2022. The document does not indicate any negative history, such as litigation or bankruptcy, associated with this predecessor. However, a full picture of the system's history relies on the completeness of this disclosure. Understanding a system's lineage is important for assessing inherited strengths or weaknesses.

Potential Mitigations

• Your attorney can help you review all disclosures related to predecessors in Items 1, 3, and 4.
• A business advisor can assist in conducting independent online searches for news or reviews related to the predecessor company.
• When speaking with longstanding customers or employees of the affiliate-owned locations, you could inquire about the business operations under the previous owner.

Explanation

This risk was not identified in the FDD package. Item 3 states, "No litigation is required to be disclosed in this Item." The absence of disclosed litigation, particularly claims of fraud or breach of contract brought by other franchisees, is a positive indicator. However, this only reflects the history up to the FDD issuance date, and the situation could change.

Potential Mitigations

• An attorney should always be engaged to review Item 3 carefully for any disclosed litigation and its potential implications.
• Even with no disclosed litigation, asking current franchisees about any disputes or disagreements they've had with the franchisor can provide valuable insight.
• A business advisor can help you perform independent online searches for news of any recent legal disputes that may not yet be in the FDD.