Explanation

This risk was not identified in the FDD package. Item 20 data shows steady growth with no franchisee terminations, non-renewals, or other cessations of business since inception. A low turnover rate is generally a positive indicator of franchisee satisfaction and system health, though the system is still very young and small, meaning this data has limited historical depth. You should still monitor this in the future.

Potential Mitigations

• During your due diligence calls, asking current franchisees about their satisfaction and future intentions can provide qualitative insight into system stability.
• A business advisor can help you analyze the Item 20 data in future FDDs to spot any emerging negative trends in turnover.
• Consult with your attorney to understand the grounds for termination outlined in the franchise agreement, which could contribute to future turnover.

Explanation

This risk was not identified in the FDD package. Item 20 data indicates the system is very new and growing slowly, from one to four franchised outlets over a three-year period. Rapid growth can strain a franchisor's ability to provide adequate support, but that does not appear to be a concern here. The primary risk is the opposite: that the system is unproven and small, not that it is growing too quickly.

Potential Mitigations

• It is still valuable to ask existing franchisees about the quality and responsiveness of the support they currently receive.
• Your business advisor can help you evaluate the franchisor's strategic plan for future growth to ensure it is sustainable.
• An accountant's review of the franchisor's financials can help determine if they have the resources to support future, potentially faster, growth.

Explanation

This risk was not identified in the FDD package. The franchise operates a veterinary hospital brokerage and consulting business. This is a specialized professional service, not a consumer-facing concept tied to a potentially short-lived trend. The business model's success depends on long-term dynamics within the veterinary industry rather than fleeting consumer interests, suggesting it is not a fad.

Potential Mitigations

• A business advisor can help you research the long-term outlook and trends within the veterinary practice brokerage industry.
• Discuss the stability and demand for these professional services with veterinarians or other industry professionals.
• Your attorney can review the franchise agreement to ensure there are no unusual restrictions that might limit your ability to adapt to market changes.

Explanation

This risk was not identified in the FDD package. Item 1 does not indicate that the franchisor is owned or controlled by a private equity firm. The management team described in Item 2 suggests the company is owned by its founding individuals. Therefore, risks often associated with private equity ownership, such as a focus on short-term returns over long-term system health, do not appear to be present.

Potential Mitigations

• During your due diligence, you can confirm the ownership structure with the franchisor's principals.
• Your attorney can review the corporate documents to verify the ownership structure if there are any uncertainties.
• A business advisor can help you understand the implications of different ownership structures on a franchise system's strategy and culture.

Explanation

This risk was not identified in the FDD package. Item 1 states clearly, "We do not have any parents or predecessors." The franchisor entity, DVMMatch, LLC, appears to be the top-level entity in the franchising structure. The document does disclose affiliate companies, which is the proper procedure. Therefore, there are no concerns about undisclosed parent companies or their financials.

Potential Mitigations

• Your attorney can confirm the corporate structure and the relationship between the franchisor and its disclosed affiliates.
• An accountant can review the financial statements to ensure there are no transactions or notes that suggest the influence of an undisclosed parent company.
• Discussions with the franchisor can help clarify the roles of the affiliate companies mentioned in Item 1.

Explanation

This risk was not identified in the FDD package. Item 1 of the FDD states, "We do not have any parents or predecessors." This indicates the franchisor is a startup entity in terms of this specific franchise offering and did not acquire the system from a prior company. Therefore, there are no predecessor-related historical issues, such as past litigation or bankruptcy, to consider.

Potential Mitigations

• Your attorney can verify the information in Item 1 regarding the franchisor's history.
• While there is no predecessor, you should still perform thorough due diligence on the history and experience of the key individuals in Item 2.
• Speaking with the earliest franchisees can provide insight into the system's history since its inception.

Explanation

This risk was not identified in the FDD package. Item 3 states, "No litigation is required to be disclosed in this Item." This indicates there is no history of material litigation involving the franchisor, its management, or predecessors concerning fraud, franchise law violations, or other relevant matters. The absence of such litigation is a positive factor, suggesting a clean legal history to date.

Potential Mitigations

• Your attorney can conduct an independent public records search to confirm the absence of litigation.
• Asking current franchisees about any disputes, even those not rising to the level of litigation, can provide valuable insight.
• Understanding the dispute resolution process in the franchise agreement is wise, as your attorney can explain.