Explanation

This risk was not identified in the FDD package. High franchisee turnover, indicated by a large number of terminations, non-renewals, or other cessations in Item 20, can be a major red flag for systemic problems. The data for iTrip, LLC (iTrip) does not show a high turnover rate. For example, in 2024, there were zero terminations or non-renewals. The primary concern is stalled growth, not high turnover.

Potential Mitigations

• It is still wise to have your accountant analyze the provided Item 20 data over the three-year period to confirm the low turnover rate.
• A conversation with your business advisor about the system's recent lack of net growth would be a prudent step.
• Your attorney can help you frame questions to former franchisees from the Item 20 list to understand their reasons for leaving.

Explanation

This risk was not identified in the FDD package. Rapid system growth can strain a franchisor's ability to provide adequate support. The data in Item 20 shows that iTrip's growth has slowed significantly, with zero net growth in franchised outlets in 2024. Therefore, the risks associated with expanding too quickly do not appear to be present at this time.

Potential Mitigations

• Engage a business advisor to discuss the potential implications of a franchise system with stalled or slowing growth.
• During your due diligence calls, ask current franchisees about their perception of the system's growth trajectory and market saturation.
• Your accountant can help you model different growth scenarios to understand how they might impact your potential return on investment.

Explanation

This risk was not identified in the FDD package. A new or unproven franchise system can carry higher risks due to a lack of track record. iTrip first began offering franchises in 2015 and, as per Item 20, has over 100 operating units. The system is well-established and cannot be considered new or unproven.

Potential Mitigations

• A business advisor can still help you evaluate the maturity of the franchise system relative to its direct competitors.
• It is always recommended to consult with your attorney to understand all terms, regardless of the system's age.
• Have your accountant review the multi-year financial data to confirm the company's operational history and stability.

Explanation

This risk was not identified in the FDD package. A fad business relies on a fleeting trend, creating long-term risk. The iTrip franchise operates in the vacation and short-term property rental management industry. This is a large, established sector of the broader travel and real estate markets and is not considered a fad.

Potential Mitigations

• You should still discuss the long-term outlook for the vacation rental industry in your specific market with a local real estate professional.
• A business advisor can help you analyze competitive trends and the sustainability of the iTrip business model.
• Consider working with your financial advisor to assess the resilience of the travel industry to various economic cycles.

Explanation

This risk was not identified in the FDD package. Inexperienced management can be a significant liability for a franchise system. However, the executive biographies in Item 2 of the FDD indicate that the key personnel have years of experience with iTrip or its affiliates and within the broader industry. The management team appears to be experienced.

Potential Mitigations

• When speaking with current franchisees, it is still a good practice to ask about their direct experiences with the management team's competence and support.
• Your business advisor can help you research the professional backgrounds of the key executives listed in Item 2.
• During any direct meetings with the franchisor, you should assess the professionalism and knowledge of the management team.

Explanation

This risk was not identified in the FDD package. A franchisor's failure to disclose its parent company can hide financial weaknesses or control structures. iTrip, in Item 1, provides a very clear and detailed description of its entire corporate structure, tracing ownership up through multiple entities to its ultimate parent. The disclosure appears to be complete.

Potential Mitigations

• It's good practice for your attorney to review the corporate structure described in Item 1 to ensure it is clear and logical.
• Have your accountant confirm that the financial statements provided are for the correct legal entity offering the franchise.
• A business advisor can help you understand the roles of the various affiliated companies mentioned in Item 1.

Explanation

This risk was not identified in the FDD package. A franchisor's predecessor history can reveal past issues like litigation or high failure rates. Item 1 of the FDD explicitly states, "We do not have any predecessors." Therefore, this risk is not applicable.

Potential Mitigations

• Your attorney should always verify the franchisor's statement regarding predecessors by reviewing the corporate history disclosed in Item 1.
• Asking early franchisees about the history of the company can sometimes uncover information about prior business structures.
• A business advisor can perform independent research on the company's founders to check for other related, prior ventures.

Explanation

This risk was not identified in the FDD package. A pattern of litigation against a franchisor can signal systemic problems. Item 3 of the FDD states, "No litigation must be disclosed in this Item." This indicates a clean recent history regarding the types of material litigation that require disclosure.

Potential Mitigations

• An attorney can still conduct independent searches of public court records to verify the absence of significant litigation.
• When speaking with former franchisees, you should inquire if any unresolved disputes contributed to their departure.
• Always have your attorney carefully review the dispute resolution clauses in the Franchise Agreement to understand your rights if a conflict arises.