Explanation

Item 20 data shows a fairly stable number of outlets over the past three years, not indicating excessively rapid growth that might strain support systems. The system size has fluctuated between 208 and 211 units. Therefore, the specific risk of support infrastructure being overwhelmed by rapid expansion does not appear to be present in this FDD package.

Potential Mitigations

• Engaging a business advisor can help you evaluate whether the franchisor's current support infrastructure seems adequate for the system's size.
• It is still wise to ask current franchisees about the quality and responsiveness of the support they receive from the franchisor.
• Your attorney can help you understand the support obligations the franchisor has committed to in Item 11.

Explanation

This risk was not identified. Häagen-Dazs is a well-established brand, and the franchisor has been offering franchises since 1983, as stated in Item 1. This indicates a long operational history and a proven business concept, rather than a new or unproven system. The risks associated with an emerging franchisor, such as lack of brand recognition or undeveloped systems, do not appear to apply here.

Potential Mitigations

• When evaluating any franchise, it is prudent for your business advisor to assess the brand's current market position and long-term viability.
• An attorney can review the franchisor's history as disclosed in Item 1 for any red flags related to predecessors or recent changes in ownership.
• An accountant should still review the financial statements in Item 21 to confirm the stability of even a mature system.

Explanation

This risk was not identified. The Häagen-Dazs brand and ice cream parlor concept have a long history of consumer demand, dating back decades. The business is not tied to a recent or fleeting trend. A fad business carries the risk that consumer interest will decline, potentially harming the long-term viability of your investment after the trend passes, which does not appear to be a primary concern here.

Potential Mitigations

• Your business advisor can help research long-term consumer trends in the premium dessert market to confirm the brand's ongoing relevance.
• Review the franchisor's plans for innovation and new product development in Item 11 with your financial advisor.
• It is wise to assess any business's resilience to economic downturns with an accountant.

Explanation

This risk was not identified. Item 2 discloses that the key executives, such as the President, have extensive and long-term experience with the Shoppe Company, holding various operational and management roles for many years. This indicates a management team with deep experience in both the specific business and franchising, which is a positive factor. Inexperienced management can lead to poor support and strategic errors.

Potential Mitigations

• It is still beneficial to discuss the management team's reputation and effectiveness with current franchisees.
• A business advisor can help you assess if the management team's skills align with the company's future goals.
• Your attorney can review the backgrounds disclosed in Item 2 for any potential conflicts of interest or other concerns.

Explanation

This risk was not identified in the FDD package. Item 1 clearly discloses the parent corporations, including Dreyer's Grand Ice Cream Company, Inc., and the ultimate ownership structure. Item 21 provides audited financial statements for the franchisor entity itself. Failure to disclose a parent company can obscure the true financial backing and control of a franchise system, but that does not appear to be the case here.

Potential Mitigations

• Your attorney can help you understand the relationships between the franchisor and the parent companies disclosed in Item 1.
• It is good practice to have your accountant review the provided financial statements to assess the franchisor's standalone stability.
• Always verify if any guarantees are provided by the parent company and what those guarantees cover by reviewing the documents with legal counsel.

Explanation

This risk was not identified in the FDD package. Item 1 notes a change in the ultimate ownership structure in 2020 but does not identify any 'predecessors' in the legal sense of an entity from which the current franchisor acquired the system. The franchisor, The Häagen-Dazs Shoppe Company, Inc., has been operating since 1983. A lack of clear predecessor information, when applicable, can hide a troubled history, which is not a concern here.

Potential Mitigations

• Your attorney can confirm the corporate history outlined in Item 1 to ensure a complete understanding of the business's lineage.
• When analyzing any franchise, it's wise to ask long-term franchisees about their experiences under any previous ownership structures.
• A business advisor can help you research the history of the brand in the public domain for additional context.

Explanation

This risk was not identified in the FDD. Item 3 states, "No litigation is required to be disclosed in this item." While this is a positive sign, it doesn't mean no litigation exists, only that none meets the specific disclosure requirements of franchise law. A pattern of franchisee-initiated lawsuits alleging fraud or misrepresentation would be a major red flag indicating systemic problems.

Potential Mitigations

• Your attorney can conduct independent public record searches to see if any litigation exists that was not required to be disclosed.
• It is always a crucial step to ask current and former franchisees about their experiences and if they are aware of any disputes within the system.
• A business advisor can help you assess the overall health of franchisor-franchisee relations through due diligence calls.