Explanation

This risk was not identified in the FDD Package. As a new franchise system that began operating in 2023, there is insufficient history to show any franchisee turnover. While no negative data exists, this lack of history means there is also no track record of franchisee success, retention, or satisfaction. The absence of data itself represents a form of risk, which is addressed in the 'New/Unproven Franchise System' analysis.

Potential Mitigations

• Speaking with the first group of franchisees as they complete their first year will be crucial for understanding system health.
• Your business advisor can help you establish metrics to monitor the system's growth and turnover rates if you proceed.
• It is advisable to have your attorney review future FDDs annually to track turnover trends as the system matures.

Explanation

This risk was not identified in the FDD Package. Item 20 data indicates the system is in its infancy, with only one franchise open and ten signed agreements. The risk is not rapid growth straining resources, but rather the opposite: the system is new and unproven, which carries its own distinct set of risks regarding support and viability. Future rapid growth could become a concern if not managed properly.

Potential Mitigations

• In discussions with the franchisor, you should inquire about their strategic plans for scaling support infrastructure to match future growth.
• A business advisor can help you evaluate whether the franchisor's management team has the experience to handle future expansion effectively.
• Having your accountant review the franchisor's capitalization can provide insight into their ability to fund necessary support staff as the system grows.

Explanation

This risk was not identified in the FDD Package. The franchise operates in the home healthcare sector, specifically focusing on medically complex children. This is an established and growing segment of the healthcare industry driven by long-term demographic and medical trends, not a short-term or novelty-driven fad. The business model appears to address a persistent market need rather than a fleeting consumer interest.

Potential Mitigations

• A business advisor can help you research long-term industry trends to confirm the sustained demand for pediatric home healthcare services.
• Analyzing market data with a financial advisor will help validate the stability and growth prospects of this specific industry niche.
• You should discuss the business's resilience to economic cycles with the franchisor and existing franchisees.

Explanation

This risk was not identified in the FDD Package. According to Item 1, the franchisor, First Day Franchising, LLC, is owned by its founding members. There is no disclosure of ownership by a private equity firm or other institutional investor whose primary focus might be on short-term financial returns over the long-term health of the brand and its franchisees. Ownership appears to be with the operational leadership team.

Potential Mitigations

• It is still prudent to ask your attorney to confirm the ownership structure through a review of corporate documents.
• Discussing the long-term vision for the company with the founders can provide insight into their commitment to the system.
• Your attorney should review the assignment clause in the Franchise Agreement to understand what happens if the company is sold in the future.

Explanation

This risk was not identified in the FDD Package. Item 1 of the FDD clearly discloses the relationship between the franchisor, First Day Franchising, LLC, and its affiliate, First Day Homecare, LLC, which operates the company-owned outlet. There is no indication of a hidden parent company whose financials or operational history are being obscured. The structure appears transparent in the disclosure document.

Potential Mitigations

• An attorney can verify the corporate structure and ensure all relevant entities have been properly disclosed.
• Your accountant should review the affiliate's role and any financial interdependencies with the franchisor.
• Confirming with the franchisor that there are no other controlling entities is a reasonable due diligence step.

Explanation

This risk was not identified in the FDD Package. Item 1 of the FDD explicitly states, "We do not have any parents or predecessors." This indicates that the current franchisor entity did not acquire the system from a prior company, and therefore there is no predecessor history of litigation, bankruptcy, or franchisee turnover to analyze or be concerned about. The system's history begins with the current franchisor.

Potential Mitigations

• Your attorney can confirm the franchisor's corporate history to ensure the accuracy of the 'no predecessor' statement.
• A business advisor can help research the founders' prior business activities for additional context, even if there is no formal predecessor entity.
• Diligent review of the franchisor's own limited history, as disclosed in the FDD, remains critical.

Explanation

This risk was not identified in the FDD Package. Item 3 of the FDD states there has been no litigation required to be disclosed against the franchisor, its predecessors, or its management team. The absence of a litigation history is typical for a new franchise system but provides no track record on how the franchisor handles disputes. You should not assume no disputes will arise in the future.

Potential Mitigations

• Your attorney should still conduct public record searches to verify the 'no litigation' disclosure.
• It is wise to discuss the franchisor's dispute resolution philosophy with management and current franchisees.
• Careful negotiation of the dispute resolution clauses in the Franchise Agreement with your attorney is important, given the lack of history.