Explanation

This risk was not identified in the FDD Package. The RV rental industry is well-established and not based on a new or fleeting consumer trend. While subject to economic cycles, the core business concept is not considered a fad, which generally reduces the risk of a sudden collapse in consumer demand.

Potential Mitigations

• Your business advisor can help you research the long-term stability and economic trends of the RV rental and travel industries.
• Discuss the sustainability of the business model with current franchisees to gauge its performance through different seasons and economic conditions.
• An accountant can help you model financial scenarios based on potential fluctuations in travel demand.

Explanation

This risk was not identified in the FDD Package. FDD Item 2 indicates that the founder has direct experience operating a similar RV rental business since 2016. Other key personnel also appear to have relevant experience in franchising, accounting, and operations, suggesting the management team is familiar with the industry and its challenges.

Potential Mitigations

• It is still wise to discuss the management team’s accessibility and the quality of their support with current franchisees.
• Reviewing the professional backgrounds of the key personnel listed in Item 2 with your business advisor is a good practice.
• Your attorney can help you formulate questions for the franchisor about the management team's long-term vision for the system.

Explanation

This risk was not identified in the FDD Package. Item 1 of the FDD does not indicate that Fireside RV is owned or controlled by a private equity firm. The risks associated with short-term profit motives and potential cost-cutting in support services that can sometimes accompany private equity ownership do not appear to be present.

Potential Mitigations

• Your attorney should always confirm the ownership structure disclosed in Item 1 of the FDD.
• In any franchise, it is beneficial to ask existing franchisees about any recent changes in ownership and the resulting impact on the system.
• A business advisor can help you understand the potential impacts of different ownership structures on a franchise system.

Explanation

This risk was not identified in the FDD Package. Item 1 clearly states, “We do not have any parent entities.” While an affiliate is disclosed as the trademark owner, there is no indication of an undisclosed parent company whose financial health or operational stability would be material to your investment decision.

Potential Mitigations

• Your attorney can verify the corporate structure and confirm the accuracy of the disclosures in Item 1.
• Asking the franchisor directly to confirm there are no other controlling entities or parent companies is a reasonable due diligence step.
• Ensure your accountant reviews the financial statements provided to confirm they represent the franchising entity.

Explanation

This risk was not identified in the FDD Package. Item 1 states that the franchisor does not have any predecessors. The document discloses an affiliate company with prior operating experience, but this is distinct from a legal predecessor from which the franchisor acquired its assets, so there is no hidden history to investigate.

Potential Mitigations

• Your attorney can confirm the definition of a 'predecessor' and verify the franchisor’s disclosure.
• It remains a good practice to ask early franchisees about the company's history and evolution.
• A business advisor can help you research the background of the affiliate company mentioned in Item 1 for additional context.

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 an absence of significant lawsuits filed by or against the franchisor involving claims of fraud, misrepresentation, or violations of franchise law, which is a positive sign for a young system.

Potential Mitigations

• Your attorney can conduct independent searches for litigation involving the franchisor or its principals as a final check.
• It is always prudent to ask current franchisees if they are aware of any disputes within the system, even if they haven't resulted in litigation.
• A business advisor can help you understand what level of litigation is typical for a franchise system of this size and age.