Explanation

This risk was not identified in the FDD Package. The pet waste removal industry is well-established. However, it is important to consider whether local market demand is sustainable and not just tied to recent trends in pet ownership. A business that relies on a fleeting trend can face significant challenges once public interest declines, potentially leaving you with a long-term contractual obligation for a business with a diminishing customer base.

Potential Mitigations

• Conducting independent market research with a business advisor is crucial to verify the long-term demand for these services in your specific area.
• It is wise to evaluate the business model's resilience against economic shifts that might affect consumer spending on discretionary pet services.
• Your financial advisor can help you assess the franchisor's plans for innovation and adaptation to stay relevant in a changing market.

Explanation

This risk was not identified in the FDD Package. The executives listed in Item 2 appear to have significant experience in franchising and related service industries, with many having long tenures with the DoodyCalls brand or its affiliates. Generally, a management team without specific experience in both the industry and in managing a franchise system can pose a risk, as they may lack the expertise to provide effective support, training, and strategic guidance.

Potential Mitigations

• It's still valuable to ask current franchisees about their direct experiences with the management team's accessibility and quality of support.
• A business advisor can help you research the professional backgrounds of the key executives listed in Item 2.
• In discussions with the franchisor, inquire about the company's long-term strategic vision and leadership stability.

Explanation

This risk was not identified in the FDD Package. The franchisor appropriately discloses its parent companies, including AB Assetco LLC and the ultimate parent Authority Brands, Inc. It also provides the audited consolidated financial statements for both of these parent entities in Exhibit I, along with a performance guarantee from AB Assetco. This level of disclosure provides important transparency into the financial health and structure of the entire organization.

Potential Mitigations

• Your accountant should still perform a detailed review of the provided parent company financial statements to assess the overall financial health.
• It is wise to have your attorney examine the specific terms of the parent guarantee to understand its scope and limitations.
• A business advisor can help you understand the complex corporate structure outlined in Item 1 and its potential implications for you.

Explanation

This risk was not identified in the FDD Package. Item 1 discloses a predecessor, DoodyCalls Services LLC, which operated from 2004 to 2021. The FDD appears to provide the required information about this entity. Generally, a failure to disclose or provide sufficient information about a predecessor could hide a history of problems, such as high franchisee turnover or litigation, that might be relevant to your investment decision.

Potential Mitigations

• When speaking with long-tenured franchisees, asking about their experience under the predecessor company can provide valuable context.
• A business advisor can help you conduct independent research on the predecessor entity to look for any public records or news reports.
• Your attorney can confirm that the predecessor information provided meets all legal disclosure requirements.

Explanation

This risk was not identified in the FDD Package. Item 3 states that no litigation is required to be disclosed. A pattern of lawsuits filed by franchisees against a franchisor alleging issues like fraud, misrepresentation, or breach of contract would be a significant warning sign about systemic problems. Likewise, a high number of suits filed by the franchisor against franchisees could indicate an overly aggressive or litigious culture.

Potential Mitigations

• Even without disclosed litigation, it is prudent to ask current and former franchisees about any disputes they are aware of within the system.
• Your attorney can conduct a public records search to see if any litigation exists that was not required to be disclosed.
• Understanding the dispute resolution process in the Franchise Agreement is important should a conflict arise in the future; your attorney can explain this.