Explanation

This risk was not identified in the FDD package. The tables in Item 20 show that FAMP, LLC has not had any franchised outlets open, transfer, or close. While this means there is no history of turnover, it also highlights the newness of the franchise system. High turnover is generally a significant red flag indicating potential systemic problems.

Potential Mitigations

• A business advisor can help you establish clear performance benchmarks for your own operations from the outset.
• It is important to have your accountant help you develop a detailed financial plan with strong contingency funds, given the lack of historical franchisee data.
• Your attorney can help you understand your rights and obligations if you decide to exit the system in the future.

Explanation

This risk was not identified in the FDD package, as Item 20 indicates there are no existing franchised outlets. Rapid system growth can sometimes strain a franchisor's ability to provide adequate support to all franchisees. Since the system is new, this specific risk is not currently present, but it could become a factor in the future if the franchisor begins to sell franchises quickly.

Potential Mitigations

• Asking the franchisor about their strategic growth plan and how they intend to scale support systems can provide valuable insight.
• A business advisor can help you assess the franchisor's capacity for providing support as the system grows.
• It is beneficial to have your attorney review the franchisor's contractual support obligations to understand what is guaranteed.

Explanation

The business model is for mobile aircraft maintenance and repair services. While the aviation industry itself is well-established, a mobile-only franchise concept within this highly regulated and specialized field may be less proven. The long-term consumer demand and competitive resilience for this specific franchise model, compared to established maintenance providers at airports, presents a degree of uncertainty. The risk is that the model's viability could be more limited than anticipated.

Potential Mitigations

• Independent market research, with help from a business advisor, is recommended to validate the long-term demand for a mobile aircraft repair model in your target area.
• Questioning the franchisor about the sustainability of the business model and its key differentiators is an important due diligence step.
• An accountant can help you model different revenue scenarios to assess the financial resilience of the business.

Explanation

This risk was not identified in the FDD package. Item 1 discloses the parent companies as Day Zero Capital LLC and Wargo Enterprises, LLC, which appear to be private holding companies rather than large private equity firms known for acquiring and flipping brands. There is no information suggesting a business model focused on short-term returns over the long-term health of the franchise system.

Potential Mitigations

• It is still valuable for your attorney to review any clauses in the Franchise Agreement that give the franchisor the right to sell or assign the system.
• A business advisor can assist in researching the ownership structure and history of the parent companies for a more complete picture.
• Understanding the franchisor's long-term vision for the brand during discussions can provide helpful context.

Explanation

This risk was not identified in the FDD package. Item 1 discloses two parent companies and their relationship to the franchisor. The financial statements provided are for the franchisor entity, Fly Alliance Maintenance Partners, LLC, which is appropriate for a startup franchisor under franchise disclosure rules. There is no indication of undisclosed parent companies or affiliates whose financial condition would be material to your investment decision.

Potential Mitigations

• Your attorney can confirm the corporate structure and ensure all relevant entities have been properly disclosed.
• An accountant should review the provided financial statements to ensure they are sufficient for assessing the franchisor's viability.
• During your due diligence, you can ask the franchisor to clarify the role and responsibilities of each parent company.

Explanation

This risk was not identified in the FDD package. Item 1 of the FDD explicitly states that the franchisor has no predecessors within the last ten years. Therefore, there is no history from a prior version of the company that could conceal past failures, litigation, or other systemic problems. The risks associated with this franchise are those of a new enterprise, not an inherited one.

Potential Mitigations

• It is useful for your business advisor to research the business history of the key executives listed in Item 2 to understand their professional background.
• Your attorney should confirm that the 'no predecessor' statement aligns with the company's formation documents and history.
• Your accountant should focus on the current financial statements and capitalization of the new entity, as there is no past performance to analyze.

Explanation

This risk was not identified in the FDD package. Item 3 states there is no litigation that requires disclosure. A clean litigation history is positive, but as a new franchisor with no franchisees, there has been limited opportunity for disputes to arise. The absence of litigation is expected for a company this new but does not provide insight into how the franchisor will handle disputes in the future.

Potential Mitigations

• Your attorney should carefully review the dispute resolution clauses in the Franchise Agreement to understand the process for handling future conflicts.
• It is wise to have your business advisor research the litigation history of the franchisor's principals at their prior companies, if possible.
• Maintaining open and documented communication with the franchisor can help prevent disputes from escalating.