Explanation

This risk was not identified. The FDD's Item 21 contains audited financial statements for the franchisor's parent guarantor, Mosquito Joe SPV LLC's (Mosquito Joe LLC) parent, Neighborly Assetco LLC. A review of these statements indicates the parent entity is profitable and has a positive net worth. The financials do not appear to present immediate concerns about the franchisor’s ability to meet its support obligations, and performance is guaranteed by the parent entity.

Potential Mitigations

• It is crucial to have your accountant review the franchisor's and any guarantor's financial statements to assess their long-term stability.
• Your business advisor should help you understand the implications of the securitization structure mentioned in Item 1 on the franchisor's financial operations.
• An attorney can explain the terms and strength of the Parent Guarantee provided in Exhibit D.

Explanation

This risk was not identified. Item 20 data shows steady and managed growth in the number of franchised outlets over the past three years, not the kind of explosive growth that often strains a franchisor's support systems. A rapidly expanding system can sometimes fail to provide adequate support to all its new and existing franchisees. This does not appear to be a primary concern based on the provided information.

Potential Mitigations

• Your business advisor can help evaluate whether the franchisor’s current support infrastructure, as described in Item 11, is adequate for the system's size.
• In discussions with current franchisees, inquire about their experiences with the quality and timeliness of franchisor support.
• An accountant can analyze the franchisor's financials in Item 21 to assess if they are allocating sufficient resources to franchisee support services.

Explanation

This risk was not identified. The franchisor and its predecessor have been in operation since 2012 and have a large, established system of over 400 franchised units, as shown in Item 20. The management team disclosed in Item 2 has extensive experience in both franchising and the specific industry. The system does not appear to be new or unproven, which typically reduces risks associated with underdeveloped support and unverified business models.

Potential Mitigations

• It's still valuable to have your business advisor review the experience of the key executives listed in Item 2.
• Consulting with franchisees from various cohorts (new, established) can provide a comprehensive view of the system's evolution and support consistency.
• Your attorney can help you understand the history of the predecessor and the implications of the 2021 Securitization Transaction mentioned in Item 1.

Explanation

This risk was not identified. The business of outdoor pest control, focusing on mosquitoes, ticks, and fleas, addresses a recurring consumer demand driven by health and lifestyle concerns. The franchisor's long history since 2012 suggests a sustainable market. While consumer preferences can change, this specific service is not based on a short-term trend or fad. The franchisor also operates within a large, multi-brand home services company, suggesting a focus on long-term business models.

Potential Mitigations

• Engage a business advisor to research the long-term outlook for the pest control services industry in your specific market.
• When speaking with long-tenured franchisees, ask about how customer demand has evolved over the years.
• Your financial advisor can help assess the business's resilience to economic shifts and changing consumer spending habits.

Explanation

This risk was not identified. The executive team described in Item 2 appears to have significant experience in both the pest control industry and in managing large franchise systems. For example, the President, Lou Schager, has been with the brand since 2017. Other key executives are part of the larger Neighborly parent company, which manages numerous franchise brands. This depth of experience generally reduces risks associated with inexperienced management.

Potential Mitigations

• A business advisor can help you conduct further due diligence on the backgrounds of the key executives listed in Item 2.
• In discussions with franchisees, you should still inquire about their direct experiences and the quality of support they receive from the current management team.
• Understanding the corporate structure and the role of the parent company's management is a task your attorney can assist with.

Explanation

This risk was not identified. The FDD clearly discloses the franchisor's parent companies, including Neighborly Assetco LLC and its ultimate owner structure involving KKR. Audited financial statements for Neighborly Assetco LLC, which serves as the guarantor of the franchisor's performance, are provided in Exhibit C. This level of disclosure appears to meet regulatory requirements and provides transparency into the financial backing of the system.

Potential Mitigations

• An accountant should be engaged to review the provided parent company financials and explain the corporate structure.
• It is important to have your attorney review the terms of the Parent Guarantee in Exhibit D to understand its scope and limitations.
• Your business advisor can help you research the parent company and its other franchise holdings for a broader context.

Explanation

This risk was not identified. The FDD discloses a predecessor, Mosquito Joe Franchising, LLC, and provides its history. Item 1 details the acquisition by Neighborly in 2018 and the subsequent internal restructuring in 2021. Items 3 and 4 do not indicate any significant negative history, such as bankruptcy or major litigation, specifically associated with the predecessor entity that would be a cause for concern. The disclosure appears straightforward.

Potential Mitigations

• A franchise attorney can help you fully understand the corporate history detailed in Item 1 and its implications for your agreement.
• When speaking with long-tenured franchisees, ask about their experience operating under the predecessor entity.
• Your business advisor can assist in researching public records for any additional information on the predecessor's history.