Explanation

This risk was not identified. The data in Item 20 shows a stable and relatively slow growth in the number of franchised outlets. Rapid expansion can strain a franchisor's ability to provide adequate training and support, so the moderate pace of growth seen here can be a positive sign, suggesting a focus on supporting existing franchisees rather than just on rapid sales.

Potential Mitigations

• When evaluating any franchise, it is wise for your business advisor to analyze the system's growth rate in Item 20 over a three-year period.
• You should discuss the franchisor’s capacity to support its franchisees with both new and established operators.
• An accountant can help assess if the franchisor's financial statements in Item 21 reflect sufficient investment in support infrastructure.

Explanation

This risk was not identified. Murphy Business & Financial Corporation LLC (Murphy LLC) and its predecessor have been operating and franchising since 2006, as detailed in Item 1. This indicates a long operational history and an established business model, which typically reduces the risks associated with investing in a new or unproven franchise concept.

Potential Mitigations

• Your attorney should always verify the franchisor's operating history and experience as disclosed in Item 1 of the FDD.
• It is beneficial to have a business advisor assess the maturity and stability of the franchise system.
• Speaking with long-term franchisees can provide valuable perspective on the system's evolution and stability over time.

Explanation

This risk was not identified. The business brokerage services offered by the franchise are part of a well-established professional services industry. This is not a concept based on a new or fleeting trend, which suggests a greater potential for long-term market sustainability and demand, reducing the risk of the business becoming obsolete.

Potential Mitigations

• A business advisor can help you conduct independent market research to confirm the long-term demand for the franchise's services in your area.
• You should evaluate the franchisor’s plans for innovation and adaptation to stay competitive within its established industry.
• Understanding the business's resilience to economic cycles is a key discussion to have with your financial advisor.

Explanation

This risk was not identified. Item 2 of the FDD describes a management team with considerable experience in business brokerage, franchising, and related fields. The key personnel appear to have long tenures with the company or its predecessor, which suggests leadership stability and a deep understanding of the business operations. This experience can be a significant asset in providing effective support to franchisees.

Potential Mitigations

• Your attorney and business advisor should always help you vet the backgrounds of the key executives listed in Item 2.
• Speaking with current franchisees can offer insights into the quality and effectiveness of the management team's support and strategic direction.
• You should inquire about management's direct experience in supporting a franchise network of this size.

Explanation

This risk was not identified. Item 1 of the FDD describes the franchisor's ownership structure and does not indicate that it is owned by a private equity firm. The risk of short-term, profit-driven decisions at the expense of long-term brand health, which can sometimes be associated with private equity ownership, does not appear to be present here.

Potential Mitigations

• It is important to have your attorney review Item 1 to understand the franchisor's complete ownership structure, including any parent companies.
• If a franchisor is owned by a private equity firm, a business advisor can help research the firm's track record with other franchise brands.
• Discussing any ownership changes with current franchisees can reveal shifts in company culture or support levels.

Explanation

This risk was not identified. The FDD clearly discloses the parent company, MB Brokerage Group, LLC, in Item 1. The provided financial statements in Exhibit D are consolidated statements for Murphy LLC and its subsidiaries, which is appropriate and provides a clear view of the franchising entity's financial health. There does not appear to be an attempt to obscure the corporate structure.

Potential Mitigations

• Your attorney should always confirm that parent companies are properly disclosed in Item 1 and that their financials are included if required.
• An accountant can help assess whether the provided financial statements give a complete and accurate picture of the entity you are contracting with.
• Understanding any guarantees or support obligations from a parent company is a critical part of the due diligence process.

Explanation

This risk was not identified. The FDD discloses a predecessor entity in Item 1 and provides a clear narrative of the corporate reorganization. Importantly, Items 3 and 4 state there is no material litigation or bankruptcy history associated with the predecessor. This transparency and clean history reduce the risk of inheriting unresolved issues from a prior corporate entity.

Potential Mitigations

• Your attorney should carefully review all disclosures related to predecessor entities in Items 1, 3, and 4.
• If a franchisor has a complex predecessor history, consider using a business advisor to research the predecessor's reputation and past performance.
• Speaking with franchisees who have been with the system through an ownership change can provide valuable firsthand accounts.

Explanation

This risk was not identified. Item 3 of the FDD states that there is no litigation that requires disclosure under federal franchise law. The absence of a pattern of lawsuits filed by franchisees alleging fraud, misrepresentation, or breach of contract is a positive indicator for the health and integrity of the franchise system's relationships.

Potential Mitigations

• An attorney should always be engaged to review the litigation disclosures in Item 3 of any FDD.
• It is prudent to perform independent online searches for recent news or legal filings involving the franchisor that may not yet appear in the FDD.
• Asking current and former franchisees about their experiences with disputes can provide valuable context beyond formal litigation disclosures.