Explanation

This risk was not identified in the FDD package. Item 20 data does not show any franchisee terminations, non-renewals, or other cessations of operation. However, since the franchise system is very new, having only started in 2023, this data is not yet a meaningful indicator of long-term system health. High turnover in a mature system can signal franchisee dissatisfaction or lack of profitability.

Potential Mitigations

• Your business advisor should help you monitor future FDDs for any emerging trends in franchisee turnover as the system matures.
• Engaging with a broad range of current franchisees is essential to gauge satisfaction levels and future intentions, a task your attorney can help guide.
• An accountant can help you understand the financial performance data in Item 19, which is often a leading indicator of future turnover.

Explanation

This risk was not identified in the FDD package. Lawn care is a well-established and long-standing service industry. The business model does not appear to be based on a short-term trend or fad, which reduces the risk of a sudden decline in consumer demand that could jeopardize the long-term viability of your investment.

Potential Mitigations

• A business advisor can help you assess the long-term demand for lawn care services in your specific market.
• Engaging an accountant to model the business's potential resilience to economic cycles is a valuable step.
• It is wise to have your attorney review the franchise term to ensure it aligns with your long-term business goals.

Explanation

This risk was not identified in the FDD package. Item 2 indicates that the key management personnel directly responsible for the Lawn Pride brand have extensive and long-term experience in the lawn care industry, with many having worked for the predecessor company for decades. This suggests a deep understanding of the business operations, which is a positive factor for franchisee support.

Potential Mitigations

• Your business advisor can help you review the biographies in Item 2 to confirm management's relevant industry and franchising experience.
• It is a good practice to ask existing franchisees about their direct experiences with the support and guidance from the management team.
• Seeking legal counsel to understand the management structure and decision-making authority is advisable.

Explanation

This risk was not identified in the FDD package. Item 1 provides a detailed disclosure of the complex corporate structure, including the direct parent, manager, and ultimate parent company. Furthermore, Item 21 provides audited financial statements for both the parent guarantor (Neighborly Assetco LLC) and the manager (Neighborly Company), along with a parent guarantee in Exhibit D, which appears to meet disclosure requirements.

Potential Mitigations

• A franchise attorney can help you understand the complex corporate structure and the roles of the various parent and affiliate entities.
• It is prudent to have your accountant review the financial statements of all disclosed parent entities to assess the system's overall financial strength.
• Clarifying with your attorney the scope and enforceability of any parent guarantees is an essential step.

Explanation

This risk was not identified in the FDD package. Item 1 discloses the predecessor entity, Lawn Pride, Inc., and Items 3 and 4 do not list any relevant litigation or bankruptcy history for this predecessor. The FDD appears to provide a clear history of the brand's transition to the new franchisor entity without indicating inherited issues from the predecessor's past.

Potential Mitigations

• A discussion with your attorney is recommended to ensure the predecessor disclosures in Items 1, 3, and 4 are complete and to understand their implications.
• It can be beneficial to ask long-term employees or the franchisor about the operational history under the predecessor entity.
• Your business advisor can help you research the predecessor's public reputation, if any information is available.

Explanation

This risk was not identified in the FDD package. Item 3 does not disclose any litigation against the franchisor, Lawn Pride SPV LLC. While litigation involving affiliate brands is noted, there is no pattern of franchisee-initiated lawsuits alleging fraud or misrepresentation against the parent company, Neighborly. The absence of such litigation against the franchisor is a positive indicator, though the system is very new.

Potential Mitigations

• Your attorney should confirm the absence of litigation and explain the significance of any litigation involving affiliate brands.
• It is good practice to perform an independent online search for any recent lawsuits or franchisee complaints not yet disclosed in the FDD.
• A business advisor can help you assess the corporate culture of the parent company based on its overall litigation history.