Explanation

This risk was not identified in the FDD package. Item 20 data shows no franchisee terminations, non-renewals, or cessations of operation for other reasons in the last three years. A pattern of high turnover can be a significant red flag, often indicating systemic problems such as low franchisee profitability, inadequate support, or an unviable business model. The absence of such turnover here is a positive indicator for a young system.

Potential Mitigations

• It is still prudent to speak with a range of current franchisees listed in Item 20 to gauge their satisfaction and future intentions with the help of your business advisor.
• Your accountant can help you monitor future FDDs for any changes in turnover trends if you proceed.
• An attorney can help you understand your rights and the franchisor's obligations if systemic issues were to arise in the future.

Explanation

The non-medical in-home care industry is well-established and not considered a fad. The business provides essential services to an aging population, which suggests sustained, long-term consumer demand. This stability reduces the risk of your investment becoming obsolete due to shifting trends. The franchisor's business model appears to be based on a durable market need rather than a temporary phenomenon.

Potential Mitigations

• A business advisor can still help you research local market competition and demand to validate the model's viability in your specific area.
• It is wise to have your accountant help you develop financial projections based on the realities of this established industry.
• Your attorney should review the franchise agreement to ensure you have the flexibility to adapt to future changes in the senior care industry.

Explanation

The business experience of the management team listed in Item 2 appears relevant to the senior care and franchising industries. For example, Clayton Foutch is noted as the founder with a history in the brand since 2008, and other executives have backgrounds in healthcare, franchising, and scaling organizations. This level of relevant experience may lower the risks often associated with new franchise systems, as the leadership team is not new to the underlying business.

Potential Mitigations

• A business advisor can help you further investigate the specific track records of the key executives and their success in previous, similar roles.
• When speaking with current franchisees, you should specifically ask about their direct experiences with the leadership team and the quality of their guidance.
• Your attorney can help you understand how management's stated experience translates into enforceable support obligations in the franchise agreement.

Explanation

This risk was not identified in the FDD package. Item 1 does not indicate that the franchisor is owned by a private equity firm. This can be a positive factor, as it may suggest that business decisions are more likely to be focused on the long-term health of the brand and franchisee success, rather than short-term returns for outside investors. Ownership stability is a key consideration when evaluating a franchise opportunity.

Potential Mitigations

• It is still prudent to ask the franchisor about their long-term ownership structure and any plans for future sale of the company with the help of a business advisor.
• Your attorney can help you understand the 'Assignment by Franchisor' clause, which dictates what happens if the company is sold in the future.
• An accountant can review the financials for signs of heavy debt that might prompt a future sale.

Explanation

This risk was not identified in the FDD package. Item 1 clearly identifies the franchisor, Senior HealthCare Investments, LLC, and its affiliate, Apex Senior Solutions Inc. It does not appear that there is a parent company whose financials would be material to your investment decision but have been omitted. Proper disclosure of all controlling entities is a key requirement for assessing the true financial backing and stability of the franchise system.

Potential Mitigations

• A franchise attorney can help you verify the corporate structure and ensure all relevant affiliated entities have been properly disclosed.
• In discussions with your accountant, review the financial statements and any inter-company transactions for clarity.
• Seeking advice from a business advisor on the roles of the disclosed affiliates can provide a better understanding of the system's operational structure.

Explanation

This risk was not identified in the FDD package. Item 1 does not list any predecessors for the franchisor, Senior HealthCare Investments, LLC. A predecessor is a company from which the franchisor acquired the main assets of the business. The absence of a predecessor means the history presented in this FDD, including financial performance and litigation, represents the complete history of this specific franchisor entity, which simplifies due diligence.

Potential Mitigations

• You should still have an attorney review Item 1 and the franchisor's corporate history to confirm there are no entities that should have been disclosed as a predecessor.
• Your business advisor can help you research the history of the key individuals in Item 2 to understand their full background in the industry.
• An accountant should review the financial statements for any notes that might relate to past business acquisitions or restructuring.

Explanation

This risk was not identified in the FDD package. Item 3 states that there is no litigation required to be disclosed. This is a positive sign, as a pattern of lawsuits, especially those initiated by franchisees alleging fraud or misrepresentation, can indicate systemic problems within a franchise. The absence of such disclosed litigation suggests a less contentious relationship between the franchisor and its franchisees to date.

Potential Mitigations

• An attorney can still conduct independent searches for litigation that may not have met the technical disclosure requirements of Item 3.
• Asking current and former franchisees about any disputes they are aware of, even those not reaching litigation, is a wise due diligence step to take with a business advisor.
• Understanding the dispute resolution process outlined in the franchise agreement is critical should a disagreement arise later; a lawyer should explain this.