Explanation

This specific risk was not identified in the FDD package. Item 20 data shows the system began franchising in 2024 and grew to seven operating units without any terminations, non-renewals, or other cessations. While this means there is no history of high turnover yet, it also highlights the system's newness. High turnover is a critical red flag in established systems, often indicating franchisee dissatisfaction or lack of profitability.

Potential Mitigations

• Your business advisor should help you monitor future Item 20 disclosures for any signs of increasing franchisee turnover as the system matures.
• Speaking with the initial group of franchisees listed in Item 20 can provide early insights into their satisfaction and potential challenges.
• An attorney can help you understand your rights and the franchisor's obligations if systemic problems develop.

Explanation

This specific risk was not identified in the FDD package. Item 2 discloses a management team with prior executive experience at other established franchise systems like Xponential Fitness and Restore Hyper Wellness, as well as experience within the goGLOW brand's affiliated companies. A lack of relevant management experience can be a major risk, as it may signal an inability to provide effective support, training, and strategic leadership for a franchise system.

Potential Mitigations

• It is still prudent to ask current franchisees about their direct experiences with the management team's responsiveness and support.
• A business advisor can help you research the professional backgrounds of the key executives listed in Item 2 for additional context.
• Your attorney can help you confirm that the support obligations outlined in the Franchise Agreement are specific and robust.

Explanation

This risk was not identified in the FDD package. Item 1 does not indicate that goGLOW is owned by a private equity firm. Private equity ownership can sometimes introduce risks related to a focus on short-term returns, which may not always align with the long-term health of franchisees. This can manifest as increased fees, reduced support, or a rapid sale of the franchise system.

Potential Mitigations

• During your due diligence, asking the franchisor about their long-term ownership and strategic plans can provide valuable insight.
• Your attorney should review the assignment clauses in the Franchise Agreement to understand your rights if the company is sold.
• Consulting with a business advisor can help you understand different franchise ownership structures and their potential implications.

Explanation

This risk was not identified in the FDD package. Item 1 discloses the existence of parent and affiliate companies, such as goGLOW Holding, LLC. Crucially, Item 21 and the attached Exhibit F contain the audited financial statements for the franchisor entity, goGLOW Franchise, LLC, as required. It is a risk when a franchisor is a thinly capitalized subsidiary and the parent company's financials, which provide the real backing, are not disclosed.

Potential Mitigations

• Your accountant should still carefully review the provided financial statements and the notes describing relationships with parent and affiliate entities.
• It's wise to have your attorney clarify the specific roles and obligations of each affiliated entity mentioned in the FDD.
• Asking the franchisor to explain the complete corporate structure can ensure full transparency.

Explanation

This specific risk was not identified in the FDD package. Item 1 does not disclose any predecessors. When a franchisor has acquired a system from a predecessor, it is important to scrutinize that predecessor's history for issues like litigation, bankruptcy, or high franchisee turnover, as these problems can sometimes carry over to the new ownership.

Potential Mitigations

• Even without a predecessor, it's beneficial to ask the franchisor about the full history of the brand and its operating affiliates.
• A business advisor can assist in researching the background of the founders and the origins of the business concept.
• Your attorney can ensure all affiliated companies are properly disclosed and their roles are clear.

Explanation

This specific risk was not identified in the FDD package. Item 3 states that no litigation is required to be disclosed. A pattern of litigation, particularly lawsuits initiated by franchisees alleging fraud, misrepresentation, or breach of contract, can be a significant red flag about the franchisor's business practices and the health of the franchise relationship.

Potential Mitigations

• Although no litigation is disclosed, it is still wise to ask current and former franchisees about their experiences and any disputes they may have had.
• Your attorney can conduct an independent search for litigation involving the franchisor or its principals as part of due diligence.
• A business advisor can help you assess the overall health of the franchisor-franchisee relationship through franchisee interviews.