Explanation

This risk was not identified as Copier Consulting Franchising, LLC (CCF LLC) is new and has no history of franchised outlets, as shown in Item 20. Therefore, there is no turnover data to analyze. High franchisee turnover is a critical red flag in established systems, often indicating systemic problems, franchisee dissatisfaction, or lack of profitability. You will be one of the first franchisees, which carries its own set of pioneering risks.

Potential Mitigations

• Engage a business advisor to assess the risks and potential rewards of being one of the first franchisees in a new system.
• Your attorney can help you understand the importance of monitoring future Item 20 data as the system grows.
• An accountant should help you build financial models that account for the uncertainty of a new, unproven franchise system.

Explanation

This risk was not identified, as the franchisor is new with no existing franchisees. Rapid growth can strain an established franchisor's ability to provide support. While not currently applicable, you should monitor the system's growth rate if you join to ensure support infrastructure keeps pace, as they project adding several new units in the coming year.

Potential Mitigations

• Discussing the franchisor's plans for scaling their support infrastructure with a business advisor is a prudent step to assess their readiness for growth.
• If you proceed, maintaining contact with other early franchisees will be important for gauging support levels as the system expands.
• Your attorney can review the franchisor's stated support obligations in Item 11 and the Franchise Agreement.

Explanation

This risk was not identified. The business model, offering procurement consulting for office equipment and document management, operates within a well-established B2B services market. This is not a trendy or fad-based concept. However, long-term viability will depend on adapting to technological changes in the office equipment industry.

Potential Mitigations

• A business advisor can help you assess the long-term demand for these consulting services in the face of evolving office technology.
• Discuss with your accountant how to model different revenue scenarios based on potential market shifts.
• It is wise to ask the franchisor about their plans for innovation and adaptation to industry changes.

Explanation

This risk was not identified in the FDD. The franchisor appears to be founder-owned and not controlled by a private equity firm. PE ownership can sometimes introduce risks related to prioritizing short-term investor returns over the long-term health of franchisees, but that does not appear to be a factor here.

Potential Mitigations

• Your attorney can confirm the ownership structure and explain the implications of any future sale of the franchise system.
• A business advisor can help you understand different franchise ownership models and their potential impacts.
• Understanding the franchisor's long-term vision during discussions can provide insight into their goals.

Explanation

This risk was not identified. The FDD clearly states there is no parent company. It does disclose an affiliate, which is the founder's original operating business, and this relationship is transparent. A lack of disclosure about a controlling parent company can obscure financial instability or other risks, but that is not an issue here.

Potential Mitigations

• An attorney can verify the corporate structure disclosed in Item 1 is accurate.
• Understanding the relationship and any dependencies between a franchisor and its affiliates is a key part of due diligence an accountant can assist with.
• A business advisor can help assess the stability of the disclosed corporate family.

Explanation

This risk is not applicable as Item 1 states the franchisor has no predecessors. In cases where a franchisor acquires a brand from a predecessor, it is important to investigate the predecessor's history for issues like litigation, bankruptcy, or high franchisee turnover, as these can be inherited. That is not a concern with this FDD.

Potential Mitigations

• Your attorney can confirm the franchisor's corporate history as disclosed in Item 1.
• A business advisor can explain the importance of predecessor history when analyzing other franchise opportunities.
• An accountant can help review the financials of any predecessor if they were disclosed in another FDD.

Explanation

This risk was not identified. Item 3 discloses no litigation involving the franchisor, which is expected for a new company. A pattern of lawsuits, especially from franchisees alleging fraud or breach of contract, is a major red flag in an established system. It is important to monitor this Item in future FDDs if you become a franchisee.

Potential Mitigations

• Your attorney should confirm the accuracy of the Item 3 disclosure through public record searches.
• Understanding what types of litigation are red flags is a key topic to discuss with a franchise attorney.
• A business advisor can help you interpret the significance of litigation disclosures in other FDDs you may review.