Explanation

This risk was not identified. The audited financial statements for Little Greek Franchise Development, LLC (LGFL) show consistent profitability, positive cash flow from operations, and a healthy balance sheet with positive members' equity. Revenue is primarily from ongoing royalties rather than initial fees, which indicates a sustainable business model. The auditor's report does not contain any 'going concern' warnings. The franchisor appears to be financially stable and capable of supporting its franchisees.

Potential Mitigations

• Even with positive financials, having an accountant review the complete statements, including all footnotes, is a prudent step.
• Your accountant can help you understand the franchisor's financial trends over the past three years to confirm continued stability.
• A business advisor can help assess if the franchisor's financial resources are adequate for its planned system growth and support obligations.

Explanation

This risk was not identified. The data in Item 20's tables shows a low rate of negative turnover. In the most recent year (2024), there were no terminations, non-renewals, or franchisor re-acquisitions. While there were some franchise transfers, which warrant further investigation through franchisee interviews, the data does not indicate a pattern of systemic failure or franchisee dissatisfaction. Overall franchise unit count has been growing steadily.

Potential Mitigations

• Speaking with former franchisees listed in the FDD, especially those who transferred their business, is a crucial step your attorney can help you prepare for.
• To understand the context behind franchise transfers, you should ask current and former franchisees about their reasons for leaving or selling.
• Your business advisor can help you analyze the disclosed turnover rates in comparison to industry averages for similar franchise systems.

Explanation

This risk was not identified. The franchise system has grown steadily from 41 to 50 total outlets over the past three years. This rate of growth does not appear to be excessively rapid or likely to outpace the franchisor's ability to provide adequate support, especially given the company's established history (since 2011) and stable financial condition. The growth seems controlled and sustainable, rather than indicative of a high-risk expansion.

Potential Mitigations

• It is always beneficial to discuss the quality and timeliness of franchisor support with a range of existing franchisees, from new to established.
• A discussion with your business advisor can help you evaluate if the franchisor’s support infrastructure is sufficient for its current size and future plans.
• Your accountant can review the franchisor's financials to confirm it is reinvesting sufficiently in support systems to match its growth.

Explanation

This risk was not identified. Little Greek Franchise Development, LLC (LGFL) was formed in 2011 and has been franchising for over a decade. With a system of approximately 50 units and a history of steady growth and profitability as shown in Items 20 and 21, it is an established and proven franchise system. The business model is well-established in the fast-casual restaurant sector.

Potential Mitigations

• Even for an established system, speaking with current franchisees about their long-term experiences is valuable for due diligence.
• Your business advisor can help you assess the system’s competitive position in the current market.
• Consulting with an accountant to review the long-term financial trends of the franchisor provides an extra layer of assurance.

Explanation

This risk was not identified. The franchise operates in the fast-casual restaurant sector, specializing in American Greek food. This is a well-established and enduring segment of the food service industry, not a concept based on a short-term or fleeting consumer trend. The business model appears to have long-term market viability.

Potential Mitigations

• A business advisor can help you conduct independent market research to confirm sustained consumer demand for this type of cuisine in your local area.
• It's wise to evaluate the franchisor's plans for menu innovation and brand evolution to ensure it remains competitive over the long term.
• Discussing the brand's resilience and adaptability with long-standing franchisees can provide valuable insight.

Explanation

This risk was not identified. The key executives and founder listed in Item 2 have extensive, long-term experience with the Little Greek brand, with some having been involved since its inception in 2011 or earlier with predecessor entities. The Chief Operations Officer also has prior executive experience with another franchise system. The management team appears stable and well-versed in both the restaurant industry and franchising.

Potential Mitigations

• While management appears experienced, you should still ask current franchisees about their direct experiences with the leadership team's support and strategic direction.
• Engaging a business advisor to review the backgrounds of the key personnel can provide an independent perspective on their qualifications.
• It is always prudent to ask the franchisor about its management philosophy and long-term vision for the brand.

Explanation

This risk was not identified. The FDD provides no indication that Little Greek Franchise Development, LLC (LGFL) is owned or controlled by a private equity firm. The financial statements in Item 21 list 'Members' Equity,' suggesting it is a privately held limited liability company, not a PE-backed entity. This avoids the risks often associated with short-term investor return objectives.

Potential Mitigations

• During your discussions with the franchisor, it's always a good idea to ask about the ownership structure and any plans for future sale of the company.
• Your attorney can help you verify the company's ownership structure through public records for an additional layer of confirmation.
• A business advisor can help you understand the potential implications if the franchise were to be sold to a PE firm in the future.

Explanation

This risk was not identified. Item 1 of the FDD clearly states, 'We have no parent.' The financial statements provided are for the franchisor entity itself, Little Greek Franchise Development, LLC, and there is no mention of a parent company or any guarantees from such an entity. The disclosure appears to be complete in this regard.

Potential Mitigations

• Your attorney can confirm the corporate structure and the absence of a parent company through a review of public records.
• Even without a parent, your accountant should carefully review the franchisor's own financial statements to ensure it is sufficiently capitalized.
• It is good practice to ask the franchisor directly to confirm its ownership structure and the absence of any undisclosed parent or controlling entities.

Explanation

This risk was not identified. The FDD discloses one predecessor, 'Little Greek Franchising, LLC,' from which the current franchisor acquired assets in 2011. This appears to be a proper disclosure of the brand's lineage. Importantly, Items 3 and 4 state that there is no litigation or bankruptcy history to disclose for the predecessor, mitigating concerns about inherited problems.

Potential Mitigations

• Your attorney should review the predecessor disclosures to ensure they are complete and compliant with franchise law.
• Even without disclosed issues, asking long-tenured franchisees about their experiences under the predecessor can provide historical context.
• A business advisor can help you assess whether the transition from the predecessor has had any long-term effects on the system's culture or operations.

Explanation

This risk was not identified. Item 3 of the FDD states, 'No litigation is required to be disclosed in this Item.' This indicates an absence of significant legal disputes with franchisees, suppliers, or government agencies that would meet the criteria for disclosure, which is a positive sign for the health and integrity of the franchise system.

Potential Mitigations

• Your attorney can perform an independent public records search for litigation involving the franchisor as an extra layer of due diligence.
• It's always a good practice to ask current and former franchisees if they are aware of any disputes, even if they didn't result in litigation.
• You should discuss the franchisor's dispute resolution philosophy with your attorney to understand how they handle disagreements.