Explanation

This risk was not identified. The franchise system is not experiencing rapid growth; in fact, the data in Item 20 shows a net decrease in the number of franchised outlets over the past three years. While this avoids the risks of strained support systems from over-expansion, it presents different concerns related to system stagnation or decline.

Potential Mitigations

• You should discuss the reasons for the system's lack of growth with current franchisees and your business advisor.
• A careful review of the franchisor's development plans and market strategy with a business consultant can provide insight into future prospects.
• Your accountant can analyze if the franchisor's financial condition supports future growth and franchisee support.

Explanation

This risk is not present. Moe's Southwest Grill is a well-established brand. Its predecessors began offering franchises in 2001, and the system has operated for over two decades. It has hundreds of locations, indicating a mature system with extensive operational history and brand recognition, rather than an unproven concept.

Potential Mitigations

• When evaluating any franchise, it is beneficial to review the system's full history, including its predecessors, with your attorney.
• A business advisor can help you analyze the franchisor's long-term performance and strategic direction.
• Speaking with long-tenured franchisees can provide valuable perspective on the system's evolution and stability.

Explanation

This risk was not identified. The fast-casual restaurant industry, and specifically the southwestern/Mexican food segment, is a well-established and enduring part of the U.S. food service market. The Moe's Southwest Grill concept has been in operation for over two decades, suggesting it is based on sustained consumer demand rather than a short-term trend or fad.

Potential Mitigations

• It is always wise to conduct independent market research with a business advisor to assess the long-term consumer demand for the franchise's products in your specific area.
• Reviewing industry reports can help you understand the competitive landscape and growth prospects for the fast-casual restaurant segment.
• Discuss the brand's strategies for innovation and staying relevant with your business consultant.

Explanation

This risk was not identified in the FDD. Item 2 discloses the professional backgrounds of the key executives of the franchisor and its parent, GoTo Foods. The management team appears to have extensive prior experience in the restaurant and franchising industries, with executives having held senior roles at other major franchise companies like Inspire Brands, Jimmy John's, and Starbucks.

Potential Mitigations

• Even with an experienced team, it is beneficial to research the specific track records of key executives with your business advisor.
• Asking current franchisees about their direct experiences with the management team can provide insight into their competence and supportiveness.
• Your attorney can help you verify the information presented in Item 2 through publicly available sources.

Explanation

This risk was not identified. The FDD clearly discloses the parent companies, GoTo Foods Systems LLC (the Guarantor) and GoTo Foods LLC (the ultimate parent). Importantly, the FDD includes audited financial statements for both of these parent entities in Exhibit A, providing a basis for financial analysis.

Potential Mitigations

• It is crucial to have your accountant review the financial statements of all parent and guarantor entities to understand the complete financial picture.
• Your attorney should analyze the language of any parental guarantee to determine its strength and what specific obligations it covers.
• Understanding the full corporate structure with a business advisor can help you assess where operational and financial decisions are ultimately made.

Explanation

This risk was not identified as a significant issue. The FDD discloses that Moe's Franchisor LLC ("MFL") is the predecessor. The information provided about the predecessor in Items 1, 3, and 4 does not reveal any undisclosed negative history, such as bankruptcies or significant litigation, beyond what is disclosed for the current franchisor. The transition appears to be part of an internal corporate reorganization within the GoTo Foods system.

Potential Mitigations

• Your attorney should always review predecessor information carefully to ensure a complete understanding of the franchise's history.
• Speaking with franchisees who operated under the predecessor can provide valuable insights into the system's evolution.
• A business advisor can help you research the history of the brand and its prior ownership structures.