Explanation

The risk of high franchisee turnover was not identified. iMove PT, LLC is a very new franchise system, having started franchising in 2022, and has not yet experienced any franchisee terminations, non-renewals, or cessations of operation according to Item 20 data. High turnover is a critical red flag in established systems, often indicating franchisee dissatisfaction or lack of profitability, so this data should be monitored in future FDDs.

Potential Mitigations

• As the system grows, your business advisor can help you monitor franchisee turnover rates in future FDDs.
• Before investing, it is always wise to have your attorney help you formulate questions for current franchisees about their satisfaction and profitability.
• An accountant can help you analyze the Item 20 tables in future years to calculate the real turnover rate.

Explanation

The risk of excessively rapid growth was not identified. The franchisor has grown from zero to five franchised units over a three-year period, which suggests a controlled and measured expansion pace. This pace should allow the franchisor to maintain adequate support infrastructure for its franchisees. Rapid growth in other systems can sometimes strain a franchisor's ability to provide quality training and support, so this controlled growth is a positive sign.

Potential Mitigations

• A business advisor can help you assess if the franchisor's support systems are scalable for future growth.
• When speaking with current franchisees, you should ask about the quality and responsiveness of the franchisor's support.
• Your attorney can review the franchisor's contractual support obligations to ensure they are clearly defined.

Explanation

This risk was not identified. The franchise operates in the physical therapy sector, a well-established and integral part of the healthcare industry with long-term demand driven by demographics, sports injuries, and rehabilitation needs. The business model is not based on a short-term trend or fad. It is still important to assess local competition, but the underlying service is not a fad.

Potential Mitigations

• A business advisor can help you research the long-term sustainability and competitive landscape of the physical therapy market in your area.
• Your accountant can help you model the financial impact of potential shifts in healthcare reimbursement and consumer demand.
• Discuss the franchisor's plans for innovation and adaptation with them to understand their long-term vision.

Explanation

This risk is not present in the FDD. Item 1 indicates the franchisor is iMove PT, LLC (iMove PT), and Item 2 identifies the founder, Michael Gorman, as the manager. There is no disclosure of ownership by a private equity firm. Private equity ownership can sometimes introduce a focus on short-term returns over the long-term health of franchisees, so its absence can be seen as a neutral or positive factor.

Potential Mitigations

• Your attorney can verify the corporate ownership structure to confirm the absence of undisclosed controlling parties like PE firms.
• When analyzing the Franchise Agreement, your attorney should review the assignment clause to understand what happens if the franchisor is sold in the future.
• Discuss the long-term vision for the company with the founder to understand their commitment.

Explanation

This risk was not identified. The franchisor discloses in Item 1 that it does not have a parent company. The FDD presents iMove PT as a standalone entity. Therefore, the risk of unassessed financial instability or control from an undisclosed parent company does not appear to be a factor in this franchise offering.

Potential Mitigations

• A franchise attorney can help you confirm the company's structure and the absence of any undisclosed parent entities.
• Your accountant should review the franchisor's financials to assess its standalone viability without the backing of a parent company.
• In discussions with the franchisor, you can confirm their corporate structure and that no parent entity guarantees their performance.

Explanation

The risk of issues from a predecessor entity was not identified. Item 1 of the FDD states that the franchisor has no predecessors. This means the business history presented is that of the current entity, and there are no past corporate histories involving bankruptcy, litigation, or high franchisee turnover from a prior version of the franchisor that you need to be concerned about.

Potential Mitigations

• Your attorney should confirm the 'no predecessor' statement in Item 1 as part of their review.
• A business advisor can help you perform public record searches to ensure no prior, similarly named entities run by the same management have a troubled history.
• When speaking with the franchisor, you can ask about the full history of the brand prior to the formation of the current company.

Explanation

This risk was not identified. Item 3 of the FDD discloses no history of litigation involving the franchisor, its predecessors, or its management that would be material to a prospective franchisee. The absence of litigation, especially claims of fraud or breach of contract from other franchisees, is a positive indicator. A pattern of such litigation in other systems can signal significant underlying problems.

Potential Mitigations

• Your attorney should confirm the 'no litigation' disclosure in Item 3.
• Speaking with current and former franchisees can help verify if there have been any significant disputes that did not rise to the level of disclosed litigation.
• A business advisor can assist you in searching public records for any litigation that may not have been disclosed.