Explanation

This risk was not identified in the FDD Package. The franchised portion of the system is shrinking, not growing rapidly. A franchisor expanding too quickly can sometimes strain its ability to provide adequate support to new franchisees. However, in this case, the concern is related to system decline rather than overly aggressive growth.

Potential Mitigations

• Your accountant can analyze the system's size and growth trends in Item 20 to evaluate overall system stability.
• Engaging a business advisor can help you understand the potential impacts of a shrinking franchise system on brand value and support.
• It is prudent to discuss the health of the overall franchise network with your attorney.

Explanation

This risk was not identified in the FDD Package. While the current franchisor entity was formed in 2018, its predecessors have been franchising the concept since 1984. The system is mature and established in the automotive service industry, not new or unproven.

Potential Mitigations

• Assessing the franchisor’s history and experience as detailed in Item 1 is a wise step for any potential franchisee.
• You can discuss the franchisor’s track record with both current and former franchisees.
• Your franchise attorney can help you understand the implications of a franchisor's history and any predecessor companies.

Explanation

This risk was not identified in the FDD Package. The business model, which focuses on automotive oil changes, tire services, and general repair, represents a mature and established industry with consistent consumer demand. It is not considered a business based on a short-term fad.

Potential Mitigations

• Your business advisor can help you analyze the long-term market trends for any industry you consider entering.
• Independent market research is important to confirm sustained consumer demand for the franchise's products and services.
• Discussing the stability of the business concept with your financial advisor is a recommended due diligence step.

Explanation

This risk was not identified in the FDD Package. The executive team described in Item 2 appears to have significant and long-term experience in the automotive service industry and with the company itself. For example, some executives have been with the company or its predecessor for decades, indicating a stable and experienced management team.

Potential Mitigations

• A review of the management team's background in Item 2 should be part of your due diligence.
• Discussing the quality of management and support with current franchisees can provide valuable insight.
• Your business advisor can help you evaluate the strength and experience of the leadership team for any franchise opportunity.

Explanation

This risk was not identified in the FDD Package. Item 1 provides a detailed disclosure of the franchisor's parent and affiliated companies. The FDD includes financial statements for the franchisor entity as required, and there is no indication that financials for a parent company were required but omitted.

Potential Mitigations

• Your franchise attorney can help verify that the corporate structure is disclosed in accordance with franchise laws.
• An accountant should review the provided financials to assess the stability of the entity you are contracting with.
• Understanding the relationships between the franchisor and its parent companies is a key due diligence step.

Explanation

This risk was not identified in the FDD Package. Item 1 discloses the franchisor's predecessors, and Items 3 and 4 do not indicate any negative history, such as bankruptcy or material litigation, associated with them. The disclosures related to predecessor history appear to be straightforward.

Potential Mitigations

• A thorough review of Items 1, 3, and 4 with your attorney will help you understand the history of the franchisor and its predecessors.
• You can ask long-term franchisees about their experiences under any previous ownership.
• Your business advisor can help you research the public record of any predecessor companies if you have concerns.

Explanation

This risk was not identified in the FDD Package. Item 3 explicitly states that no litigation is required to be disclosed. The absence of disclosed litigation against the franchisor, particularly from franchisees, is a positive factor, especially for a system of this size and age.

Potential Mitigations

• Your attorney should always review Item 3 of any FDD to assess the franchisor's litigation history.
• It is still wise to ask current and former franchisees about any disputes they may have had, even if they didn't result in litigation.
• Performing public records searches for litigation can be a useful due diligence step a business advisor may recommend.