Explanation

This risk was not identified in the FDD package. Item 20 data shows a new system with no history of franchisee terminations, non-renewals, or other cessations. However, high turnover is a critical indicator of systemic problems, such as franchisee dissatisfaction, lack of profitability, or poor franchisor support. A high rate of transfers can also be a red flag, potentially hiding sales of failing units.

Potential Mitigations

• Your business advisor should teach you how to analyze Item 20 data for trends over multiple years, calculating the real churn rate.
• When evaluating a mature system, it is crucial to contact former franchisees with your attorney's guidance to understand their reasons for leaving.
• An accountant can help you compare a system's turnover rates against any available industry benchmarks.

Explanation

This risk was not identified. The franchise operates in the durable medical and mobility equipment market, serving the needs of the elderly and disabled populations. This is a business driven by long-term demographic trends rather than a short-lived fad. A fad business carries the risk that consumer interest will disappear, leaving you with a worthless investment while still being bound by your franchise agreement.

Potential Mitigations

• For any franchise concept, working with a business advisor to research the long-term market demand for its products or services is critical.
• You should always assess a business model's sustainability and its resilience to economic shifts with your financial advisor.
• Your attorney can review the franchise agreement to understand your obligations if the business becomes unviable.

Explanation

This risk was not identified in the FDD. The executives listed in Item 2 have extensive prior experience in both the mobility products industry and with affiliated franchise systems under the Mobility Plus brand. Inexperienced management can be a significant risk, as they may lack the specific knowledge needed to run a successful franchise system, provide adequate support, or make sound strategic decisions for the brand.

Potential Mitigations

• A review of the management team's background in Item 2 with your business advisor is a key due diligence step.
• It is wise to speak with existing franchisees to gauge their confidence in the management team's leadership and support capabilities.
• Your attorney can help you understand the backgrounds of the individuals who will be guiding the franchise system.

Explanation

This risk was not identified. Item 1 of the FDD does not indicate that the franchisor is owned or controlled by a private equity firm. When a PE firm owns a franchisor, there can be a risk that its focus on short-term investor returns may not align with the long-term health of the franchisees and the brand, potentially leading to increased fees or reduced support.

Potential Mitigations

• If a franchisor is owned by a private equity firm, engaging a business advisor to research the firm's track record with other franchise concepts is recommended.
• Your attorney should analyze the transfer rights in the franchise agreement to understand what happens if the PE firm sells the system.
• An accountant can help you assess financial changes that may have occurred in the system after a PE acquisition.

Explanation

This risk was not identified. The FDD clearly discloses in Item 1 that Mobility Plus Holdings, LLC is the parent company. Furthermore, Item 21 confirms that the parent's financial statements are provided in Exhibit D, and a parental guaranty of performance is included as Exhibit H. This level of disclosure provides important information for assessing the overall financial backing of the new franchisor entity.

Potential Mitigations

• Your accountant should always review the financial statements of any parent company that guarantees the franchisor's performance.
• The legal strength and scope of a parent guaranty should be carefully examined by your attorney.
• A business advisor can help you understand the operational relationship between a franchisor and its parent company.

Explanation

This risk was not identified in the FDD. Item 1 states clearly that the franchisor does not have any predecessors. When a franchisor has a predecessor, it is important to investigate that entity's history, as it can reveal inherited issues with the brand, operating system, or franchisee relationships that may not be immediately apparent from looking at the current franchisor alone.

Potential Mitigations

• Your attorney should always review Item 1 carefully for any disclosure of predecessor entities.
• If a predecessor exists, researching its history for litigation, bankruptcy, or high franchisee turnover with a business advisor is a critical step.
• Asking long-term franchisees about their experiences under any previous ownership can provide valuable insight.

Explanation

This risk was not identified in the FDD package. Item 3 states that there is no litigation that requires disclosure. A pattern of litigation, especially claims of fraud or misrepresentation brought by other franchisees, can be a major red flag indicating systemic problems with the franchisor's sales practices or business model. Conversely, a high number of lawsuits initiated by the franchisor against franchisees might suggest an overly aggressive or punitive relationship.

Potential Mitigations

• A thorough review of Item 3 with your attorney is a crucial step in any FDD analysis.
• For any disclosed litigation, your attorney can help you research the case details to understand the underlying issues.
• Discussing any disclosed litigation with current and former franchisees can provide valuable context.