Explanation

This risk was not identified. The FDD data does not suggest that the franchise system is growing at a rate that would outpace its support capabilities. In fact, data in Item 20 indicates a slight contraction of the system in recent years and plans for future closures. However, franchisees should always be mindful of a franchisor's ability to support its network, whether it is growing or shrinking.

Potential Mitigations

• Your business advisor can help you evaluate whether the franchisor's stated support staff levels in Item 11 seem adequate for the current system size.
• When speaking with existing franchisees, it is wise to inquire about the timeliness and quality of support they currently receive.
• An accountant's review of the franchisor's financials can help determine if resources are being allocated to support rather than just sales.

Explanation

This risk is not present. The franchisor's predecessor, Jack in the Box Inc., has been franchising since 1971 and operates a large, mature system with thousands of outlets. The business model is well-established in the quick-service restaurant industry. The risk associated with an unproven concept is low.

Potential Mitigations

• It is still valuable to have your attorney review the corporate history in Item 1 to understand the current securitized structure.
• Engaging a business advisor to research the long-term performance of the brand and its competitive position is a prudent step.
• Discuss the brand's history and evolution with long-standing franchisees to gain historical perspective.

Explanation

This risk is not present. Jack in the Box is a long-established brand in the quick-service restaurant industry, which is a mature and stable market segment. The business is not based on a new or fleeting trend, and its core products have demonstrated sustained consumer demand over many decades. The risk of the business model being a short-term fad is low.

Potential Mitigations

• A business advisor can help you analyze the brand's current competitive positioning and long-term strategy.
• Reviewing the franchisor's research and development disclosures in Item 11 can provide insight into how they plan to adapt to future market changes.
• It is prudent to discuss the brand's resilience through various economic cycles with long-tenured franchisees.

Explanation

This risk was not identified in the FDD package. Item 1 discloses a complex corporate structure involving parent companies and a securitization trust, but it does not indicate that the franchisor is directly owned by a traditional private equity firm with a typical short-term hold-and-sell strategy. However, the Franchise Agreement gives the franchisor broad rights to assign the agreement to any successor.

Potential Mitigations

• Your attorney should review the assignment clauses in the Franchise Agreement to understand the implications if the system is sold.
• It's beneficial to ask the franchisor about their long-term vision and any potential plans for a sale of the company.
• A business advisor can help you research the ownership structure and reputation of the ultimate parent company, Jack in the Box Inc.

Explanation

The franchisor entity, Different Rules, LLC, is a subsidiary within a larger securitization structure. Item 21 provides audited financial statements for the parent guarantor, Jack in the Box SPV Guarantor, LLC, and also for the ultimate parent, Jack in the Box Inc. The structure is complex, but the required financial disclosures for the relevant parent and guarantor entities appear to be present.

Potential Mitigations

• Your accountant must carefully review the financials for all disclosed entities to understand their interrelationships and individual financial health.
• It is crucial for your attorney to explain the terms and limitations of the Guaranty of Performance provided by the parent.
• Asking your financial advisor to clarify which entity's financial strength is most critical to your success is a key step.

Explanation

This risk is not present. The franchisor has a long history, and Item 1 clearly identifies Jack in the Box Inc. as its predecessor. The FDD provides relevant litigation and bankruptcy history for the predecessor, as required. The document does not appear to obscure any significant negative history related to the predecessor's operation of the franchise system.

Potential Mitigations

• It is still wise to have your attorney review the history detailed in Items 1, 3, and 4.
• A business advisor can help you research the public history of the predecessor, Jack in the Box Inc., for additional context.
• Asking long-term franchisees about their experiences under the predecessor entity can provide valuable insights.