Explanation

This risk was not identified in the FDD package. Rapid growth can strain a franchisor's ability to provide adequate support. While Fujisan has grown, from 538 outlets at the start of 2022 to 742 by the end of 2024, the primary risk identified is the high turnover rate rather than the net growth itself, which is addressed in the "High Franchisee Turnover" risk.

Potential Mitigations

• Your business advisor should help you analyze the relationship between unit growth and the franchisor's support staff headcount.
• Asking current franchisees about the quality and timeliness of support is an important step in your due diligence.
• Your accountant can review the franchisor's financials to assess if they are reinvesting sufficiently to support system growth.

Explanation

This risk was not identified. The FDD indicates that Fujisan began franchising in 2016 and its affiliate, Fuji Food Products, Inc. (FFP), was founded in 1990. The system has a substantial number of operating units and several years of history. Therefore, it does not appear to be a new or unproven franchise system.

Potential Mitigations

• An accountant should still carefully review the franchisor's financial statements for signs of stability and profitability over time.
• A business advisor can help you assess the experience of the management team outlined in Item 2.
• Consulting with a franchise attorney is advisable to understand the full history and structure of the company as disclosed in Item 1.

Explanation

This risk was not identified. The business of providing prepared sushi in kiosks, particularly within grocery stores, is a well-established market segment, not a new or fleeting trend. The franchisor's affiliate has been in this line of business since the 1990s, indicating a history of sustained consumer demand. This does not appear to be a fad-based business.

Potential Mitigations

• Engaging a business advisor to research the long-term trends and competitive landscape for grab-and-go sushi can provide valuable market insight.
• It is wise to discuss the business model's resilience to economic shifts with your financial advisor.
• Your attorney can help you evaluate the franchisor's long-term commitment to the business as described in the FDD.

Explanation

This risk was not identified in the FDD package. While you should always assess management's capabilities, Item 2 lists executives with many years of experience within Fujisan, its affiliate FFP, or other relevant food service companies. The leadership team does not appear to lack experience in either the industry or in franchising.

Potential Mitigations

• A thorough review of the executive biographies in Item 2 with your business advisor is still a prudent step.
• Asking current franchisees about their perception of management's competence and support is a critical part of due diligence.
• Your attorney can help you investigate the public record of the key personnel listed for any potential concerns.

Explanation

This risk was not identified in the FDD package. Item 1 and Item 2 do not indicate that the franchisor is owned by a private equity firm. The directors listed appear to be individuals with long-term involvement in the company or its affiliate.

Potential Mitigations

• A business advisor can help you research the ownership structure of the franchisor to confirm the identity of the principal shareholders.
• It is always wise to ask current franchisees if they are aware of any recent or anticipated changes in ownership.
• Your attorney can help you understand the implications of the 'assignment' clause in the franchise agreement.

Explanation

This risk was not identified in the FDD package. Item 1 clearly identifies Fuji Food Products, Inc. ("FFP") as an affiliate that supplies products and provides administrative support. Item 21 includes the franchisor's audited consolidated financial statements, which is the standard and appropriate disclosure. There is no indication of a hidden parent company whose financials are being withheld.

Potential Mitigations

• Your accountant should confirm that the provided financial statements are audited and comply with GAAP.
• It is a good practice to have your attorney verify the corporate structure and the relationship with all disclosed affiliates.
• Consulting with a business advisor can help you understand the operational impact of the affiliate relationships described in Item 1.

Explanation

This risk was not identified in the FDD package. Item 1 states that Fujisan does not have any predecessors. Therefore, there is no history of predecessor entities to analyze for potential issues like litigation, bankruptcy, or high franchisee turnover.

Potential Mitigations

• It is still important for your attorney to review Item 1 carefully to confirm the franchisor's corporate history.
• Your accountant should analyze the existing franchisor's history in Items 20 and 21 for any signs of instability.
• Asking long-tenured franchisees about the company's history can sometimes reveal information not present in the FDD.