Explanation

The audited financial statements for the franchisor's ultimate parent, Neighborly Assetco LLC (Neighborly), are included in the FDD. The statements for 2023 and 2024 show significant revenue and positive net income. Neighborly guarantees the franchisor's performance. Based on these provided financials, the parent entity appears financially stable and this specific risk was not identified.

Potential Mitigations

• An accountant should review the provided financial statements, including all footnotes and the auditor’s report, to form an independent opinion of the parent company's financial health.
• It is important to have your attorney verify the enforceability and scope of the Parent Guarantee.
• A business advisor can help you assess whether the franchisor's financial condition supports its ability to provide long-term support and system investment.

Explanation

The franchisor, Glass Doctor SPV LLC (Glass Doctor), and its predecessors have been franchising since 1977, and the broader Neighborly system is well-established with experienced management detailed in Item 2. Therefore, this is not a new or unproven system and this specific risk was not identified.

Potential Mitigations

• A business advisor can still help you research the brand's current market position and competitive landscape.
• It is still advisable to discuss the brand's evolution and the management's vision for the future with current franchisees.
• Your attorney should review the history and corporate structure detailed in Item 1 to ensure you understand the entity you are contracting with.

Explanation

The business provides glass repair and replacement for automotive, residential, and commercial customers. This is a long-standing service industry with consistent demand based on needs for repair and replacement of glass in vehicles and buildings. The business model does not appear to be based on a short-term trend or fad.

Potential Mitigations

• A business advisor can help you conduct independent research on the long-term demand and competitive landscape for glass repair services in your specific local market.
• Engaging with current franchisees can provide insight into the sustainability and cyclical nature of customer demand.
• Reviewing the franchisor's history in Item 1 with your attorney will provide context on the brand's longevity.

Explanation

Item 2 discloses the business experience of the franchisor's management team. These individuals appear to have significant experience within the franchise industry and with the parent company, Neighborly. Therefore, the risk of dealing with an inexperienced management team was not identified in the FDD.

Potential Mitigations

• It is still prudent to conduct your own independent research on the professional backgrounds of the key executives listed.
• A business advisor can help you formulate questions for current franchisees regarding their perception of the management team's competence and support.
• Your attorney can help you understand the roles and responsibilities of the management team as described throughout the FDD.

Explanation

The FDD discloses the parent company, Neighborly Assetco LLC, and provides its audited financial statements in Exhibit C. Furthermore, the parent provides a performance guarantee for the franchisor's obligations, which is included as Exhibit D. Therefore, the risk of non-disclosure was not identified.

Potential Mitigations

• Your accountant should thoroughly review the parent company's financial statements to assess its ability to back the guarantee.
• Having your attorney examine the specific language and enforceability of the Parent Guarantee in Exhibit D is a critical step.
• Discuss the practical effect of the parent company's involvement with current franchisees and your business advisor.

Explanation

Item 1 provides a detailed history of the franchisor and its predecessors, including Synergistic International LLC and Glassmarks, Inc. The history traces back to 1977. While the corporate structure is complex due to acquisitions and a securitization transaction, the history of the business operation itself appears to be disclosed. No specific predecessor history issues were identified beyond the complexity of the structure.

Potential Mitigations

• A thorough review of the corporate history in Item 1 with your attorney is important to understand the chain of ownership and responsibility.
• You can ask long-tenured franchisees about their experiences under any of the predecessor companies mentioned.
• A business advisor can help you research the history of the various predecessor and parent entities for a broader context.