Explanation

Item 20 tables for the Regional Developer franchises do not indicate high turnover at this level. In the last three years, only one franchisee was terminated and transfers are minimal relative to the system size. This suggests stability among the regional developer network itself. However, this data does not reflect the experience or turnover of the underlying unit franchisees you would be responsible for supporting, which is a separate consideration.

Potential Mitigations

• Your business advisor should help you analyze the Item 20 data in conjunction with the litigation risks disclosed in Item 3.
• Contacting former Regional Developers listed in Exhibit F is crucial to understand their reasons for leaving the system; your attorney can help frame questions.
• An accountant can help you model the potential financial impact of unit franchisee turnover on your own regional developer business.

Explanation

The system has been franchising since 1995 and has over 100 regional developer outlets, indicating it is not undergoing dangerously rapid growth. Item 20 shows a net gain of only three outlets in 2023 and zero net change in 2024. This stability suggests the franchisor's support infrastructure is not currently at risk of being overwhelmed by new unit openings. The primary risk appears to be legal and systemic, not related to growth outpacing support.

Potential Mitigations

• Discuss the franchisor's historical and future growth plans with a business advisor to assess their long-term strategy.
• Questioning existing franchisees about their perception of the adequacy and quality of ongoing franchisor support is a valuable step.
• A franchise attorney can review the franchisor's support obligations as defined in the Franchise Agreement to ensure they are clearly stated.

Explanation

This risk was not identified. Jan-Pro Franchising International, Inc. (JPI) has been offering franchises since 1995 and has an established network of over 100 regional developers. An unproven system presents higher risks because its business model, brand recognition, and support structures are not yet tested in the marketplace, which can lead to higher failure rates. This FDD reflects a mature franchise system.

Potential Mitigations

• Even with a mature system, it is advisable to consult a business advisor to evaluate the brand's current market position and competitive landscape.
• Your accountant should still thoroughly review the financial statements to understand the long-term financial health of the established franchisor.
• Engaging an attorney to review the full FDD package remains critical for understanding your rights and obligations within a mature system.

Explanation

This risk was not identified. The commercial cleaning industry is a mature and established market with consistent demand from businesses, rather than being based on a short-term trend or fad. The business model, which involves providing essential janitorial services, has demonstrated long-term viability. A fad-based business carries the risk that consumer interest will decline, leaving franchisees with a worthless investment and ongoing contractual obligations.

Potential Mitigations

• Your business advisor can help you conduct independent market research to confirm the long-term demand for commercial cleaning services in your specific territory.
• Assessing the system's adaptability to new technologies and cleaning standards, as detailed in Item 11, is a prudent step with a business advisor.
• It is wise to have your accountant help create financial projections based on the stable, recurring nature of the service offered.

Explanation

This risk was not identified. Item 2 shows that the key executives of Jan-Pro Franchising International, Inc. (JPI) and its parent, Empower Brands, have extensive and relevant experience in franchising and related industries. For example, key personnel have long histories with major franchise systems like ServiceMaster, United Franchise Group, and others. Inexperienced management can be a significant risk, as it may lead to poor strategic decisions and inadequate support for franchisees.

Potential Mitigations

• A business advisor can still help you research the professional backgrounds of the executive team to gain further confidence in their leadership.
• Posing questions to current franchisees about their direct experiences with the management team's competence and support is a valuable due diligence step.
• Your attorney can confirm that the management team's experience is accurately and fully disclosed as required by franchise law.

Explanation

This risk was not identified. The FDD clearly discloses the parent company structure in Item 1, tracing ownership up to the private equity firm MidOcean Partners. The franchisor, JPI, is a wholly-owned subsidiary of Empower Brands Franchising, LLC. The financial statements provided in Exhibit G are for JPI, the direct franchisor, as required. A failure to disclose a parent company could obscure the true financial backing and control structure of a franchise system.

Potential Mitigations

• Your attorney can verify the corporate structure and ensure all relevant parent and affiliate entities are properly disclosed.
• An accountant should confirm that the provided financial statements 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 and how they interact with your franchise.

Explanation

This risk was not identified. Item 1 of the FDD states that Jan-Pro Franchising International, Inc. has no predecessor entities. Therefore, there is no predecessor history to analyze for potential issues. Concealing or downplaying a predecessor's negative history, such as high franchisee failure rates or significant litigation, is a risk in some franchise offerings because it can hide systemic problems that may have been inherited by the current franchisor.

Potential Mitigations

• Your attorney should always verify the franchisor's statements regarding predecessors by reviewing Item 1 and performing independent corporate searches.
• A business advisor can help investigate the franchisor's history to ensure no entities that might qualify as predecessors have been omitted.
• Even without predecessors, speaking with long-term franchisees about the system's history and evolution is a prudent due diligence step.