Explanation

This risk was not identified in the FDD package. A new or unproven franchise system can present higher risks due to untested business models and support structures. Jet-Black began franchising in 1993, indicating it is a well-established system with a long operational history, which generally reduces risks associated with new ventures.

Potential Mitigations

• When evaluating any franchise, it's wise to have your business advisor assess the franchisor's history and track record in the industry.
• An attorney should review the business experience of the management team as detailed in Item 2 of the FDD.
• Speaking with long-term franchisees can provide valuable insight into the system's stability and evolution over time.

Explanation

This risk was not identified in the FDD package. Sealcoating and pavement maintenance is a mature and established service industry, not a business model based on a fleeting trend. Investing in a business with sustained, long-term demand is generally less risky than investing in a concept that might be considered a fad.

Potential Mitigations

• A business advisor can help you research the long-term market demand and competitive landscape for any franchise industry you consider.
• It is important to evaluate a business model's resilience to economic shifts and changing consumer tastes with your financial advisor.
• Your attorney can review the FDD for information about the franchisor's plans for future innovation and service development.

Explanation

This risk was not identified in the FDD package. The executives listed in Item 2 have extensive, long-term experience with Jet-Black, both at the corporate level and, in one case, as a former franchisee. Experienced management is a positive factor, as it suggests a deeper understanding of the business operations and franchisee needs.

Potential Mitigations

• A thorough review of the management team's background in Item 2 with your business advisor is a crucial due diligence step.
• Asking existing franchisees about their direct experiences with the leadership team can provide insight into their competence and supportiveness.
• Your attorney can help you assess if the management's experience is relevant to both the industry and to managing a franchise system.

Explanation

This risk was not identified in the FDD package. There is no disclosure in Item 1 indicating that Jet-Black is owned or controlled by a private equity firm. Private equity ownership can sometimes introduce risks related to short-term profit motives over long-term system health. The financial statements appear consistent with a privately held company.

Potential Mitigations

• Your attorney should always review Item 1 and any related corporate documents to understand the full ownership structure of the franchisor.
• If PE ownership is present in any franchise, a business advisor can help research the firm's track record with other franchise brands.
• It is important to ask current franchisees about any changes in system philosophy or support following an ownership change.

Explanation

This risk was not identified in the FDD package. Jet-Black International, Inc. is presented as the primary entity, and there is no mention of a parent company that would be required to be disclosed under franchise law. The financial statements provided are for the franchisor entity itself.

Potential Mitigations

• An attorney should always verify the franchisor's corporate structure as disclosed in Item 1.
• When a parent company does exist, it's important for an accountant to determine if the parent's financial statements are required for a complete risk picture.
• If a parent company guarantees the franchisor's obligations, your attorney should review the terms of that guarantee.

Explanation

This risk was not identified in the FDD package. Item 1 notes the 2012 acquisition of the Black Dawg Sealcoat system but clarifies that it is not technically a predecessor. The franchisor provides a clear history and appears to be transparent about this acquisition. There are no indications of undisclosed or problematic predecessor history.

Potential Mitigations

• It is good practice to have your attorney review the predecessor history in Item 1 of any FDD.
• Asking long-tenured franchisees about their experience under any prior ownership can provide valuable historical context.
• A business advisor can help you research the history of the brand and any acquired systems.

Explanation

This risk was not identified in the FDD package. Item 3 states that there is no litigation that requires disclosure. A clean litigation history is a positive indicator, suggesting fewer disputes with franchisees, regulators, or other parties.

Potential Mitigations

• Your attorney should always carefully review the litigation disclosures in Item 3 of any FDD.
• Even with no disclosed litigation, speaking with current and former franchisees can reveal past or brewing disputes.
• A business advisor can help you perform online searches for news articles or other public information about potential legal issues.