Explanation

The data in Item 20 does not indicate excessively rapid system growth that might strain the franchisor's support systems. While a concern in some franchise systems, the growth rate for Great American Cookies appears steady and managed. Therefore, this specific risk was not identified.

Potential Mitigations

• Your business advisor can help evaluate the franchisor's support staff and infrastructure in relation to its number of units.
• It is always prudent to ask current franchisees about the quality and timeliness of the support they receive from the franchisor.
• Your accountant should review the franchisor's financial statements to ensure it is reinvesting in support systems to match its growth.

Explanation

The FDD indicates that GAC began franchising in March 2008 and, as of the end of 2023, had 389 franchised outlets. This represents a long history and a well-established system, not a new or unproven one. This specific risk was not identified.

Potential Mitigations

• When evaluating any franchise, your business advisor should still help you assess the system’s maturity and its position within its industry.
• Contacting franchisees who have been with the system for many years can provide valuable insight into its long-term viability.
• Your attorney can review the franchisor's history as disclosed in Item 1 for any red flags from predecessors, even in an established system.

Explanation

The business of selling cookies and related baked goods is a well-established and mature market segment. It is not considered a fad concept that relies on a short-term trend for its appeal. Therefore, this specific risk was not identified in the FDD package.

Potential Mitigations

• A business advisor can help you analyze the long-term consumer demand and competitive landscape for this type of product in your local market.
• It is wise to ask the franchisor about their plans for product innovation and keeping the brand fresh and relevant over the long term.
• Your financial advisor can help you assess the business's resilience to economic shifts and changing consumer tastes.

Explanation

The management team detailed in Item 2 of the FDD has extensive experience in the restaurant and franchising industries, particularly within the portfolio of brands managed by the parent company, FAT Brands. There is no indication of inexperienced management. This specific risk was not identified.

Potential Mitigations

• It is still beneficial to research the professional backgrounds of the key executives listed in Item 2 using online resources.
• A business advisor can help you assess if the management team's experience aligns well with this specific brand's concept and market position.
• When speaking with current franchisees, you should inquire about their perception of management's competence and leadership.

Explanation

The FDD clearly discloses the parent company structure in Item 1, and the franchisor entity, GAC Franchising, LLC, provides its own audited financial statements in Item 21. There is no indication that required financial disclosures for a parent or guarantor have been omitted. Therefore, this specific risk was not identified.

Potential Mitigations

• Your accountant should always review Item 1 and Item 21 to confirm the identity of the franchisor and its parent entities.
• An attorney can verify if the financial statements of a parent company are required under FTC or state rules, especially if the parent guarantees the franchisor's performance.
• It is prudent to request an organizational chart from the franchisor to fully understand the corporate structure.

Explanation

Item 1 of the FDD does not disclose any predecessor entities from which GAC acquired the Great American Cookies system. The franchisor entity appears to have been operating the brand for the entirety of its franchise history. Therefore, this specific risk was not identified.

Potential Mitigations

• Your attorney should always carefully review Item 1 for any mention of predecessors, as their history can be material to your decision.
• Even without predecessors, researching the brand's history before it was franchised by the current entity can provide useful context.
• A business advisor can help you assess if any significant brand changes occurred around the time the franchisor was formed.