Explanation

This risk was not identified in the FDD Package. The franchisor, Dash In Food Stores, Inc., was incorporated in 1986 and began franchising in 2003, indicating a long operational history. An unproven system can pose risks because its business model, brand recognition, and support structures are not yet time-tested, which may lead to higher uncertainty and failure rates for early franchisees.

Potential Mitigations

• When evaluating any franchise, it's wise to have your attorney review the management team's experience in both the specific industry and in franchising.
• A business advisor can help you assess the maturity and stability of the brand and its operating systems.
• Speaking with the earliest franchisees in a system can provide valuable insights into how the franchisor has evolved and handled challenges over time.

Explanation

The Dash In concept is a convenience store, often paired with a gas station and/or car wash, which is a well-established and long-standing business model rather than a fad. A fad-based business carries the risk of declining consumer interest over time, which could jeopardize your long-term investment even if you remain contractually obligated to the franchisor for many years.

Potential Mitigations

• A business advisor can help you independently research the long-term market demand and competitive landscape for any business concept.
• It is important to evaluate a franchisor's plans for innovation and adaptation to stay relevant in the market.
• For any investment, a financial advisor can help you consider the business model's resilience to economic shifts and changing consumer tastes.

Explanation

This risk was not identified in the FDD Package. The key executives listed in Item 2 appear to have substantial experience in the convenience store, retail, and finance industries. A lack of relevant management experience can be a significant risk, as it may lead to poor strategic decisions, underdeveloped operational systems, and inadequate support for franchisees.

Potential Mitigations

• For any franchise opportunity, it is prudent to have a business advisor help you thoroughly vet the background and qualifications of the franchisor's key leadership.
• Interviewing existing franchisees is a crucial step to gauge the quality and effectiveness of the management team's support.
• Your attorney can help you understand the stability of the management team and inquire about any recent significant turnover.

Explanation

This risk was not identified in the FDD Package. The franchisor is a wholly-owned subsidiary of The Wills Group, Inc. (TWGI), which appears to be a family-owned or closely held parent company, not a private equity firm. Private equity ownership can introduce risks related to prioritizing short-term returns over the long-term health of the franchise system, potentially leading to cost-cutting in franchisee support or pressure to use affiliated vendors.

Potential Mitigations

• When considering a franchise owned by a private equity firm, a business advisor can help you research the firm's track record with other franchise systems.
• It is important to discuss with existing franchisees any changes in support or fees since an acquisition by a private equity firm.
• Your attorney should analyze the franchisor's right to assign the franchise agreement, as this is common with PE-owned brands.

Explanation

This risk was not identified in the FDD Package. Item 1 does not disclose any predecessors from which Dash In acquired the franchise system. A history involving predecessors can introduce risks if the predecessor had a history of litigation, bankruptcy, or high franchisee turnover, as these issues could potentially carry over to the current franchisor and affect the system's health and reputation.

Potential Mitigations

• When a predecessor is disclosed, your attorney should carefully review their history as detailed in Items 1, 3, and 4.
• A business advisor can help you research a predecessor's public reputation and history with franchisee relations.
• Asking long-tenured franchisees about their experience under any previous ownership can provide valuable insight.

Explanation

This risk was not identified in the FDD Package, as Item 3 states that no litigation is required to be disclosed. A pattern of lawsuits filed by franchisees against a franchisor alleging fraud, misrepresentation, or breach of contract can be a major red flag. It may indicate systemic problems with the franchisor's sales process, operational promises, or overall business practices.

Potential Mitigations

• When litigation is present in Item 3, your attorney should be consulted to analyze the nature, frequency, and outcomes of the cases.
• It is prudent to consider a high volume of franchisor-initiated litigation against franchisees as a potential indicator of an overly aggressive system.
• A business advisor can help you investigate the context of any disclosed litigation by speaking with affected franchisees.