Explanation

This specific risk was not identified. Item 20 data does not show a pattern of high franchisee turnover from terminations, non-renewals, or cessations. Analyzing system stability and franchisee satisfaction is crucial, as high turnover can signal underlying problems with profitability, support, or the business model. A stable system is more likely to provide reliable support and maintain brand value.

Potential Mitigations

• It is always wise to contact former franchisees listed in Item 20 to understand their reasons for leaving the system.
• Your business advisor can help you calculate and analyze the franchise system's churn rate over the past three years.
• Discussing overall satisfaction and the franchisor-franchisee relationship with a range of current operators is a critical due diligence step.

Explanation

This risk was not identified in the FDD package. GHC and its predecessors have been in operation for many years. When evaluating a franchise, it is important to consider the franchisor's history. A new or unproven system carries higher risks, as it may lack a refined business model, established brand recognition, and experienced support structures, which can affect your potential for success.

Potential Mitigations

• When considering any franchise, it is wise for your attorney to review the company's history and management experience in Item 1 and Item 2.
• A business advisor can help assess whether a franchisor's track record is sufficient to justify the investment.
• Contacting the earliest franchisees in a system provides valuable insight into the franchisor's evolution and consistency of support.

Explanation

This risk was not identified. The home care industry, serving an aging population, is based on long-term demographic trends rather than a short-term fad. It is always important to assess the long-term market viability of any business concept. A business based on a fad could see demand collapse, leaving you with contractual obligations and a worthless investment.

Potential Mitigations

• Researching the long-term market trends for any industry you consider entering is a crucial step for your business plan.
• A business advisor can help you evaluate a concept's resilience to economic shifts and changing consumer tastes.
• Assessing the franchisor's plans for innovation and adaptation can provide insight into their long-term vision.

Explanation

This risk was not identified, as the management team detailed in Item 2 appears to have substantial experience in both the home care industry and franchising. Inexperienced management can be a significant risk, potentially leading to poor strategic decisions, weak support systems, and a lack of understanding of the franchisee-franchisor relationship. Evaluating the background of the leadership team is a key part of due diligence.

Potential Mitigations

• A thorough review of the management team's background in Item 2 with your business advisor is always recommended.
• Speaking with current franchisees can provide insight into the effectiveness and responsiveness of the leadership team.
• Independent research on the past performance of companies where executives previously worked can be informative.

Explanation

This risk was not identified, as GHC is the primary entity and its parent company, Griswold Investors, LLC, is clearly disclosed in Item 1. When a franchisor is a subsidiary of another company, it is crucial that the parent is disclosed and, if the parent guarantees obligations or is essential to the system, that its financial statements are also provided for a complete risk assessment.

Potential Mitigations

• Your attorney should verify the corporate structure if there's any suspicion of an undisclosed controlling parent.
• If a parent company provides guarantees, it is important for your accountant to review their financial statements.
• A business advisor can help assess the level of operational and financial integration between a franchisor and its parent.

Explanation

This risk was not identified. GHC provides detailed information about its predecessors in Item 1. The history of a franchise system, including any businesses the franchisor acquired, is important. A lack of information about predecessors could hide a history of financial problems, litigation, or high franchisee failure rates that might have been inherited by the current franchisor.

Potential Mitigations

• A careful review of Item 1 with your attorney is important to understand the lineage of the franchise system.
• If a system was acquired from a predecessor, your business advisor can help you research the predecessor's public track record.
• Asking long-term franchisees about their experience under any previous ownership can provide valuable historical context.