Explanation

This specific risk was not identified in the FDD package. The Item 20 tables do not show a high number of terminations, non-renewals, or other cessations. However, prospective franchisees should always analyze turnover data carefully, as high rates can signal systemic problems, such as low franchisee profitability or poor franchisor support. The system is currently very small, so any future outlet closures would be statistically significant.

Potential Mitigations

• Engaging a franchise attorney to help you interpret the nuances of the Item 20 tables is a prudent step.
• A discussion with your accountant can help you calculate the actual turnover rates and compare them to industry averages for context.
• Contacting former franchisees listed in the FDD can provide direct insight into why they left the system; a business advisor can help frame your questions.

Explanation

The risk of excessively rapid growth, which can strain a franchisor's support systems, was not identified. Item 20 data shows the system has grown from five to seven total outlets over the past three years. This appears to be a slow and controlled rate of expansion. It is still important to monitor that franchisor support infrastructure keeps pace with any future growth to ensure new and existing franchisees receive adequate assistance.

Potential Mitigations

• Your business advisor can help you assess the franchisor's current support infrastructure relative to its size and growth plans.
• It is wise to ask existing franchisees about their perception of the quality and timeliness of the support they currently receive.
• An accountant's review of the franchisor's financials can help determine if they have allocated sufficient resources for supporting system growth.

Explanation

This specific risk was not identified. The business model, which focuses on group personal fitness coaching, operates within the well-established health and fitness industry. While market tastes can change, the core offering does not appear to be based on a short-term or fleeting trend. A franchisee's success will likely depend more on operational execution and local market factors rather than the sustainability of a fad.

Potential Mitigations

• A business advisor can help you conduct independent market research to confirm long-term consumer demand in your specific area.
• In discussions with the franchisor, you should inquire about their plans for future innovation and evolving the service offerings.
• Your accountant can assist in building a business plan that accounts for potential shifts in consumer fitness preferences.

Explanation

This specific risk was not identified in the FDD package. Item 1 indicates the franchisor's parent company is Destiny Faith, LLC, which appears to be a holding company related to the founders rather than a private equity firm. Therefore, the specific risks associated with a PE-owned franchisor, such as a focus on short-term returns over long-term system health, do not appear to be present here.

Potential Mitigations

• It is still prudent to have your attorney verify the ownership structure of the franchisor and its parent company.
• A business advisor can help you research the background and track record of the parent company and its principals.
• Understanding the franchisor's long-term vision for the brand, irrespective of ownership type, is a valuable discussion to have.

Explanation

This specific risk was not identified. The FDD discloses the existence of a parent company, Destiny Faith, LLC, which owns the trademarks. The franchisor entity itself, Impact-X Performance, LLC, has provided its own audited financial statements. There is no indication that the parent company's financials are required for disclosure under franchise law (e.g., through a financial guarantee) and have been withheld.

Potential Mitigations

• Your attorney can confirm whether the disclosure of the parent company and its relationship with the franchisor is compliant with regulations.
• An accountant should still review the provided financials to assess the stability of the franchisor entity on its own merits.
• Clarifying the specific role and obligations of the parent company versus the franchisor entity is a good practice for your business advisor.

Explanation

This risk was not identified as a major issue. The FDD discloses that the franchisor entity was formerly named Journey 333, LLC. There is no mention of other predecessors from which the franchisor acquired assets or the system. Therefore, the risk of inheriting undisclosed historical problems from a prior operator of the system appears to be low.

Potential Mitigations

• Your attorney should still confirm the corporate history provided in Item 1 and investigate the previous business name for any public records of concern.
• Asking long-standing franchisees about their experience under the former company name can provide additional context.
• A business advisor can help you perform public record searches on both the current and former entity names.

Explanation

This risk was not identified in the FDD package. Item 3 states, "No litigation is required to be disclosed in this Item." This indicates there is no current, pending, or recent material litigation involving the franchisor, its predecessors, or its management that alleges franchise law violations, fraud, or other similar claims. This lack of disclosed litigation is a positive indicator, though it does not guarantee future disputes will not arise.

Potential Mitigations

• Even with no disclosed litigation, it is wise to have your attorney conduct an independent public records search for any lawsuits involving the franchisor.
• Speaking with current and former franchisees can sometimes reveal disputes that did not escalate to formal litigation.
• A business advisor can help you research the general litigation landscape for the specific industry as part of your due diligence.