Explanation

This risk was not identified in the FDD package. Item 20 data does not show a pattern of terminations, non-renewals, or other cessations that would indicate high franchisee turnover. Generally, high turnover is a significant red flag suggesting potential issues with the system's profitability, franchisor support, or the overall business model. A stable system typically has a low rate of franchisees leaving involuntarily or for negative reasons.

Potential Mitigations

• A conversation with your business advisor about typical turnover rates in the service franchise industry can provide valuable context for future reviews.
• Inquire with a significant number of current franchisees listed in Item 20 about their satisfaction and future intentions to understand system morale.
• Your accountant can help you analyze Item 20 tables for any future FDDs you review to calculate the true turnover rate.

Explanation

This risk was not identified in the FDD package. The business of providing epoxy flooring and concrete polishing services is part of the broader, established home and commercial services industry. It does not appear to be based on a short-lived trend or novelty, suggesting a lower risk of being a fad business whose consumer demand could quickly disappear.

Potential Mitigations

• It is still prudent to have your business advisor help you research the long-term market demand and competitive landscape for these specific services in your local area.
• Ask the franchisor about their plans for future service development and innovation to ensure the business model remains relevant over time.
• Engage a financial advisor to assess the business's resilience to various economic cycles.

Explanation

This risk was not identified in the FDD package. Item 2 discloses that the management team has significant prior experience in the epoxy coating industry and in franchising through their involvement with affiliated and parent companies like Intricate Coatings Franchise, LLC, and G-FORCE Franchise Group LLC. This experience suggests they possess relevant knowledge to manage the system.

Potential Mitigations

• You should still verify the management's reputation by speaking with current franchisees in this system and other systems they operate.
• A discussion with your business advisor can help evaluate how management's experience in other brands might apply to this specific franchise.
• Investigating the performance of the affiliated franchise systems under this management team can provide insight into their capabilities.

Explanation

This risk was not identified in the FDD package. Item 1 indicates the franchisor is a limited liability company and discloses its parent companies. There is no indication that the franchisor is owned or controlled by a private equity firm. Ownership appears to be held by individuals involved in the management of the company and its affiliates.

Potential Mitigations

• When evaluating any franchise, it's a good practice to ask your attorney to confirm the ownership structure to identify any potential influence from investment firms.
• Working with a business advisor to understand the franchisor's long-term goals can help reveal if a future sale to a PE firm is likely.
• A conversation with your financial advisor about the typical impacts of PE ownership on franchise systems can be educational for future investments.

Explanation

This risk was not identified in the FDD package. Item 1 clearly discloses the parent companies, Veteran Franchise Group LLC and Intricate Coatings Franchise, LLC. There is no indication that information about a controlling parent company has been omitted. The franchisor appears transparent about its corporate structure.

Potential Mitigations

• It is always wise to have your franchise attorney review Item 1 and the corporate structure to ensure all relevant entities have been properly disclosed.
• Your accountant should confirm if any parent guarantees are in place and if the parent's financial statements should have been included.
• Should you encounter a franchise where the parent is not disclosed, consulting with a business advisor to research the corporate lineage is recommended.

Explanation

This risk was not identified in the FDD package. Item 1 of the FDD clearly states, 'We do not have any predecessors.' The franchisor is a relatively new entity and appears to have started the MACH ONE system from its inception, rather than acquiring it from a prior company.

Potential Mitigations

• When reviewing any FDD, it is important to have your attorney carefully examine Item 1 for any mention of predecessors.
• If a predecessor is listed, engaging a business advisor to help research the history and performance of the system under that entity is crucial.
• Speaking with long-term franchisees can often provide valuable, informal history about any predecessor companies.

Explanation

This risk was not identified in the FDD package. Item 3 states, 'No litigation is required to be disclosed in this Item.' This indicates the franchisor, its predecessors, and management have not been involved in the types of litigation that require FDD disclosure, which is a positive factor.

Potential Mitigations

• While none is disclosed, your attorney can conduct an independent public records search to look for any other litigation that might be relevant.
• It is good practice to ask current franchisees if they are aware of any disputes or legal actions within the system.
• Understanding what types of litigation are material and require disclosure can be clarified by your legal counsel.