Explanation

This risk was not identified in the FDD Package. Item 20 data, which tracks franchise outlet transfers, terminations, and closures, is a critical indicator of system health. Because inLIFE Wellness is a new franchisor with no existing or former franchisees in the US, there is no turnover data to analyze. A high turnover rate in an established system can signal significant problems with profitability, support, or the business model itself, making this a key area for future review.

Potential Mitigations

• If you invest, it is important to monitor future FDDs to track franchisee turnover rates with the help of your accountant.
• Engaging a business advisor to understand typical turnover rates for similar fitness franchises can provide a valuable benchmark for comparison.
• Your attorney can explain how high turnover could affect the brand's value and your investment's long-term health.

Explanation

This risk was not identified in the FDD Package. Item 20 shows that the system is new and has not yet experienced any growth, rapid or otherwise, in its number of franchised outlets. In more mature systems, rapid expansion can sometimes strain a franchisor's ability to provide adequate support, training, and quality control to all units. This is something to monitor if the brand begins to grow quickly in the future.

Potential Mitigations

• A business advisor can help you evaluate a franchisor's support infrastructure in relation to its growth plans.
• It is wise to ask your attorney to review the franchisor's contractual support obligations to understand what you are entitled to receive.
• An accountant can analyze whether the franchisor's financial resources, as shown in future FDDs, are keeping pace with system growth.

Explanation

This risk was not identified in the FDD Package. Item 1 indicates the franchisor is a subsidiary of an Australian company, not a private equity firm. Franchises owned by private equity can sometimes face pressure for short-term returns, which may affect decisions on fees, support, and long-term brand health. This does not appear to be a factor in this offering.

Potential Mitigations

• It is always a good practice to understand a franchisor's ownership structure and long-term goals, a topic you can explore with your business advisor.
• Your attorney can review Item 1 and any related corporate documents to confirm the ownership structure.
• An accountant can help you understand how different ownership structures might impact a franchisor's financial decisions and stability.

Explanation

This risk was not identified in the FDD Package. Item 1 clearly discloses the existence of the Australian parent company, INLIFE WELLNESS FRANCHISE PTY LTD. Therefore, the parent entity itself has not been hidden from disclosure. However, the financial statements for this parent company are not included in the FDD, which presents a separate financial stability risk.

Potential Mitigations

• Your attorney can confirm that the disclosures in Item 1 regarding the parent company meet all legal requirements.
• Even when a parent is disclosed, asking your accountant to assess the potential financial reliance of the subsidiary franchisor on its parent is a prudent step.
• A business advisor can help you research the parent company's reputation and operational history in its home market.

Explanation

This risk was not identified in the FDD Package. According to Item 1, the franchisor is a new entity and does not have any predecessors from which it acquired the business. Therefore, there is no risk of undisclosed negative history from a prior version of the company. The franchise system is being built from the ground up in the United States by this new entity.

Potential Mitigations

• Your attorney should always verify the statements made in Item 1 regarding predecessors and corporate history.
• When evaluating any franchise, a business advisor can help you research the full history of the brand, even if no official predecessors are listed.
• Asking early franchisees in a system about their knowledge of the brand's history is a valuable due diligence step.

Explanation

This risk was not identified in the FDD Package. Item 3 states that there is no litigation that requires disclosure. For a new franchisor, this is expected. In established systems, a pattern of lawsuits filed by franchisees alleging fraud or misrepresentation, or a high number of suits filed by the franchisor against franchisees, can be a major red flag indicating systemic problems.

Potential Mitigations

• For any FDD, having your attorney review the litigation history in Item 3 is a critical step in assessing franchisor health.
• It is wise to conduct independent online searches for any news or discussions of legal disputes involving the franchisor, with the help of your attorney.
• A business advisor can help you understand what level of litigation is 'normal' for a franchise system of a certain size and age.