Explanation

This risk was not identified in the FDD package. Item 20 tables show that there have been no franchised outlets in the system for the last three years. High franchisee turnover is a critical red flag indicating potential systemic problems, such as lack of profitability or poor franchisor support. Since this is a new system with no franchisee history, this specific risk is not applicable, but the lack of any operating franchisees presents a different kind of risk.

Potential Mitigations

• Even without turnover data, a business advisor can help you research the general health of the car rental franchise industry.
• Speaking with the management of the company-owned outlets listed in Item 20 may provide insight into operational challenges.
• Your attorney can help you understand the risks associated with joining a system that has no history of franchisee success.

Explanation

This risk was not identified in the FDD package. The data in Item 20 shows zero franchised outlets, so there has been no rapid franchise growth. Uncontrolled growth can strain a franchisor's ability to provide adequate support, training, and quality control to its franchisees. While not a current risk, monitoring the pace of future franchise sales relative to the franchisor's support infrastructure will be important if you join the system.

Potential Mitigations

• It is prudent to have a business advisor help you question the franchisor about their future growth plans and how they intend to scale their support systems.
• Reviewing the franchisor's financial capacity to support growth with your accountant is a wise step.
• Your attorney can help you understand the support obligations detailed in the Franchise Agreement.

Explanation

This risk was not identified in the FDD package. The business is in the vehicle rental industry, which is a long-established and non-fad market. A fad business is one tied to a fleeting trend, which can create significant risk for franchisees who are locked into long-term agreements that may outlast consumer interest. This does not appear to be a concern for this particular franchise concept.

Potential Mitigations

• Your business advisor can help you analyze the long-term stability and demand within the specific segment of the car rental market you plan to enter.
• Assessing local competition and market dynamics with a business consultant is a key part of due diligence.
• An accountant can help you model the financial impact of various economic conditions on a stable industry like car rentals.

Explanation

This risk was not identified in the FDD package. The management team detailed in Item 2 has extensive and relevant experience in the vehicle rental industry. Several executives, including the CEO and CPO, have long histories with the parent company, Green Motion Limited, and other major industry players like Hertz and Booking.com. This level of experience may reduce risks associated with strategic direction and operational knowledge.

Potential Mitigations

• Engaging a business advisor to review the backgrounds of the executive team in Item 2 is still a valuable due diligence step.
• You should prepare questions for the management team regarding their specific plans for supporting the new U.S. franchise system.
• Discussing the quality of management interactions with company-owned store managers could provide additional insight.

Explanation

This risk was not identified in the FDD package. Item 1 describes a corporate ownership structure under a UK-based parent company, Green Motion Limited. There is no indication of ownership by a private equity firm. PE ownership can sometimes introduce risks related to short-term profit motives over the long-term health of the franchise system. This does not appear to be a factor here.

Potential Mitigations

• A discussion with your attorney to confirm the ownership structure detailed in Item 1 is a standard part of legal review.
• Understanding the franchisor's long-term strategic goals during conversations with management can provide valuable context.
• A business advisor can help you research the history and reputation of the parent company, Green Motion Limited.

Explanation

This risk was not identified in the FDD package. Item 1 does not disclose any predecessors for Green Motion LLC, as it is a new legal entity. Issues can arise when a franchisor acquires a system from a predecessor and inherits historical problems that are not fully disclosed. This does not appear to be the case here.

Potential Mitigations

• It is always good practice to have your attorney review Item 1 to confirm the franchisor's corporate history and identify any disclosed predecessors.
• Engaging a business advisor to research the history of the brand, even if there is no legal predecessor, can be insightful.
• Your accountant should review the franchisor’s financial statements for any notes related to acquisitions of assets or brands.