Explanation

This risk was not identified in the FDD package. As a new franchise system that began offering franchises in 2023, there is no history of franchisee turnover reported in Item 20. High turnover can be a significant red flag indicating systemic problems, so monitoring this data in future FDDs will be important as the system matures.

Potential Mitigations

• It is critical to contact the initial group of franchisees listed in Item 20 to gauge their early experiences and satisfaction.
• Your business advisor can help you establish metrics to monitor system health and growth in the future.
• Consulting your attorney about the importance of franchisee validation calls is essential when assessing a new franchise system.

Explanation

The risk that the business is a fad was not identified. The lawn care industry is well-established and generally not considered a fad. However, any business's long-term success depends on its ability to adapt to market changes, competition, and evolving consumer preferences.

Potential Mitigations

• Assess the long-term market demand for these specific services in your local area with your business advisor.
• Evaluate the franchisor's plans for innovation and adaptation to stay competitive by discussing their strategy.
• Consider the business model's resilience to economic downturns with your financial advisor.

Explanation

This risk was not identified in the FDD package. Item 2 indicates that the key executives of Lawn Squad LLC and its parent, Authority Brands, Inc., have extensive experience in the franchise industry and with other large, established service-based franchise brands. This depth of relevant management experience is a positive factor.

Potential Mitigations

• A thorough review of the backgrounds of the key management personnel listed in Item 2 with your business advisor is still a prudent step.
• When speaking with existing franchisees, you should ask about their direct experiences with the management team's support and strategic direction.
• Your attorney can help you understand the roles and responsibilities of the key personnel as they relate to your franchise.

Explanation

This risk was not identified. The FDD clearly discloses the parent and guarantor structure in Item 1. Item 21 appropriately includes the audited financial statements for the guarantor, Authority Brands, Inc., as required, along with a copy of the Guarantee of Performance. This provides the necessary financial information for a prospective franchisee to evaluate the entity backing the franchisor's obligations.

Potential Mitigations

• It is still essential for your franchise accountant to perform a thorough review of the guarantor's financials to assess its stability.
• Your attorney should review the Guarantee of Performance to confirm the extent of the parent's obligations to you.
• Asking the franchisor about the relationship and support flow between the parent and the Lawn Squad brand can provide additional context.

Explanation

This risk was not identified. Item 1 indicates that the franchisor has no predecessors. The franchisor entity, Lawn Squad Franchising LLC, is new. While an affiliate, Weed Pro, Ltd., operated a similar business, the FDD does not characterize it as a predecessor from which assets were acquired in a way that would trigger predecessor disclosure requirements. Therefore, there is no hidden history to assess.

Potential Mitigations

• Your attorney should confirm the corporate history described in Item 1 to ensure no predecessor entities have been omitted.
• Asking early franchisees about the transition from the affiliate's business model to the new franchise system can provide valuable insight.
• A business advisor can help you assess the risks inherent in a new system without a formal predecessor history.

Explanation

This risk was not identified in the FDD package. Item 3 explicitly states, "No litigation is required to be disclosed in this Item." This indicates an absence of the type of material litigation involving the franchisor, its predecessors, or key personnel that would require disclosure under franchise law, which is a positive sign for a new system.

Potential Mitigations

• Your attorney can conduct an independent public records search to verify the absence of significant litigation.
• It remains important to ask current franchisees about any disputes they may be aware of, even if not disclosed in Item 3.
• Maintaining open communication and a positive relationship with the franchisor can help prevent future disputes, a strategy your business advisor can help develop.