Explanation

This risk was not identified. Item 20 tables show the franchise system is very new and small, with no reported franchisee terminations, non-renewals, or cessations of business to date. While this indicates stability in its initial phase, high turnover in other franchise systems can signal widespread franchisee dissatisfaction, a lack of profitability, or other systemic problems that could affect your investment.

Potential Mitigations

• A business advisor can help you analyze the growth trajectory in Item 20 to understand the system's early development stage.
• Speaking with all current franchisees listed in Exhibit D is critical to gauge their satisfaction and outlook.
• Your attorney can help you formulate questions for current franchisees about their experience with the support provided by this new franchisor.

Explanation

This risk was not identified. The data in Item 20 shows the system is growing at a slow and seemingly controlled pace, adding only a few units per year. Rapid growth can sometimes strain a franchisor's ability to provide adequate support to all its franchisees. The observed growth rate here does not suggest that support resources are likely to be overextended.

Potential Mitigations

• Discussing the franchisor's future growth plans and how they intend to scale their support systems can be a valuable conversation to have with a business advisor.
• Your accountant can review the franchisor's financial statements in Item 21 to assess if they are investing in infrastructure to support future growth.
• Speaking with current franchisees about the quality of support they are receiving is recommended.

Explanation

This risk was not identified. Item 2 indicates that the key executives of the franchisor have substantial and long-term experience with the "Green Mill" brand and in the restaurant industry. In some franchise systems, inexperienced management can pose a risk, potentially leading to poor strategic decisions or inadequate support. However, the management team here appears to have significant relevant industry experience.

Potential Mitigations

• It is always a good practice to research the backgrounds of the key management team listed in Item 2.
• A discussion with current franchisees about their perception of the management team's competence and support can be insightful.
• Your business advisor can help you assess how management's experience aligns with the specific challenges of this franchise concept.

Explanation

This risk was not identified. Based on the information in Item 1 and Item 2, the franchisor appears to be managed by long-term restaurant industry professionals rather than a private equity firm. Private equity ownership can sometimes introduce risks related to a focus on short-term returns over the long-term health of the system. This does not appear to be the case here.

Potential Mitigations

• Understanding the ownership structure in Item 1 is always a wise step; your attorney can help clarify relationships between entities.
• In any franchise, a review of the franchisor's assignment rights in the Franchise Agreement with your attorney is important.
• A business advisor can help you research the parent company's history and business philosophy.

Explanation

This risk was not identified. Item 1 discloses a history involving predecessor companies, but there are no disclosed issues like bankruptcy or significant litigation associated with them in Items 3 and 4. A problematic history with predecessor companies can sometimes indicate unresolved issues or a pattern of failure that might carry over to the current franchisor. That does not appear to be the case based on the disclosures.

Potential Mitigations

• It is good practice to have your attorney review the predecessor history in Item 1 for any potential concerns.
• If you speak with long-term franchisees of the affiliate "Green Mill" brand, you could inquire about their experience under any prior ownership.
• A business advisor can help you research the public record of any predecessor companies if you have concerns.

Explanation

This risk was not identified. Item 3 of the FDD states that there is no litigation that requires disclosure. A pattern of lawsuits, particularly those initiated by franchisees alleging fraud or misrepresentation, can be a major red flag indicating systemic problems. The absence of such disclosures in this FDD is a positive indicator, suggesting a clean recent legal history for the franchisor.

Potential Mitigations

• It is still a good practice to conduct independent online searches for any news or legal actions involving the franchisor or its affiliates.
• Your attorney can confirm that the disclosures in Item 3 meet all legal requirements.
• Asking current franchisees about any past or pending disputes is a key part of due diligence.