Explanation

This risk was not identified in the FDD package. As a new franchise system that only began operating in 2023, there is no history of franchisee terminations, non-renewals, or other cessations. High turnover is generally a significant red flag indicating potential systemic problems, so its absence here is positive but also reflects the system's immaturity. Ongoing monitoring of this data in future FDDs will be important as the system grows.

Potential Mitigations

• As the system matures, it is prudent to analyze Item 20 turnover data with your accountant in future FDDs.
• Speaking with a range of franchisees from the list in Item 20 can provide qualitative insight into satisfaction levels, which your business advisor can help facilitate.
• Your attorney can explain the contractual reasons that typically lead to franchisee turnover.

Explanation

This risk was not identified in the FDD package. The business provides lawn care and maintenance services, which is a well-established industry with consistent demand and is not dependent on a current trend or fad. This stability suggests a lower risk of the business model becoming obsolete due to shifting consumer interests.

Potential Mitigations

• Your business advisor can help you research long-term market trends for the lawn care industry in your specific geographic area.
• An accountant can assist in modeling the business's potential resilience to various economic cycles.
• For any franchise, it is wise to have your attorney review the exit strategies available under the franchise agreement.

Explanation

This risk was not identified in the FDD package. Item 2 indicates that the brand-specific management has extensive experience in the lawn care industry. The brand's President, Susan McIntosh, has been with the predecessor company since 1994, and other key personnel have long tenures with affiliated brands. This suggests that the leadership team has relevant operational experience.

Potential Mitigations

• A business advisor can help you verify the backgrounds of key management personnel listed in Item 2.
• It is always a good practice to ask current franchisees about their direct experiences with the leadership team's competence and support.
• Your attorney can help you understand the management structure and how it might impact your franchise.

Explanation

This risk was not identified in the FDD package. Item 1 provides a detailed summary of the franchisor's corporate structure, including numerous parent and affiliate entities up to the ultimate parent. The document also includes financial statements for both the guarantor (Neighborly Assetco LLC) and the manager (Neighborly Company), providing a transparent view of the entities supporting the franchise.

Potential Mitigations

• A franchise attorney can help you understand the complex corporate structure and the relationships between the various entities disclosed.
• Your accountant should review the financial statements of all provided entities to assess the overall health of the system's support structure.
• It's wise to ask the franchisor to clarify the specific roles and responsibilities of each parent and affiliate entity.

Explanation

This risk was not identified in the FDD package. Item 1 discloses a predecessor entity but also notes that the predecessor did not offer franchises. Items 3 and 4 do not indicate any history of litigation or bankruptcy for the predecessor. The primary risk associated with the predecessor is its lack of franchising experience, which is addressed under the 'New/Unproven Franchise System' risk.

Potential Mitigations

• Having your attorney review the predecessor's history as disclosed in Items 1, 3, and 4 is a standard part of due diligence.
• A business advisor can help you assess how the transition from the predecessor to the current franchisor might impact operations.
• Asking long-tenured employees or early franchisees about the predecessor can provide valuable context.

Explanation

This risk was not identified in the FDD package. Item 3 does not disclose any litigation against the franchisor (Lawn Pride SPV LLC) or its predecessor. While it lists two historical administrative orders against affiliated brands (Window Genie and Molly Maid), these are dated and do not represent a pattern of litigation related to the Lawn Pride franchise system itself.

Potential Mitigations

• Your attorney should always carefully review Item 3 for any disclosed litigation, even if it involves affiliates.
• Conducting independent online searches for any recent litigation not yet disclosed in the FDD is a good practice for your business advisor.
• Asking current franchisees about any legal disputes they are aware of within the system can provide additional insight.