Explanation

This risk was not identified. The franchisor's audited financial statements in Exhibit D show profitability, positive equity, and a healthy reliance on royalty income over initial franchise fees. This suggests a financially stable company capable of supporting its franchisees. However, a prospective franchisee should always have their own accountant review the financials for a complete picture.

Potential Mitigations

• An experienced franchise accountant should always conduct a thorough review of the franchisor's financial statements, including all footnotes and trends.
• Discuss the franchisor’s financial health and capitalization with your financial advisor to understand their ability to support the system long-term.
• Your attorney should verify if any state has imposed financial assurance requirements, such as a bond or escrow, based on past financial performance.

Explanation

This risk was not identified. Item 20 data shows the system has experienced slow growth and even a net reduction in units in recent years, not the rapid expansion that can strain support systems. This indicates the franchisor is likely not overextended in its ability to support the current number of franchisees.

Potential Mitigations

• Engage your business advisor to analyze the system's growth trajectory in Item 20 against the franchisor's stated expansion plans.
• Consult with current franchisees to gauge whether the level of franchisor support has remained consistent over time.
• Your accountant can review the franchisor's financial statements in Item 21 to assess if they have the resources to support future growth.

Explanation

This risk was not identified. The franchisor has been offering franchises since 2012, and its affiliate has operated a similar business since 2007, as disclosed in Item 1. This indicates a system with more than a decade of operational and franchising history, suggesting it is not a new or unproven concept.

Potential Mitigations

• A business advisor can help you investigate the franchisor's history and the track record of its management team, detailed in Items 1 and 2.
• Interviewing the longest-tenured franchisees listed in Item 20 provides valuable insight into the system's evolution and stability.
• Your attorney should review Items 1 and 2 for any disclosures about predecessors or recent changes in ownership that could impact the system's stability.

Explanation

This risk was not identified. The business provides deer, tick, and mosquito control services, an established market driven by recurring consumer needs for health and property protection. This is not a business model that appears to be based on a short-term trend or fad, suggesting more stable long-term demand.

Potential Mitigations

• It is prudent to conduct your own market research with a business advisor to assess the long-term demand for the services in your specific area.
• Review the franchisor's plans for service innovation and adaptation in Item 11 to gauge their strategy for future market relevance.
• Consider the business's resilience to economic downturns and changing consumer priorities with your financial advisor.

Explanation

This risk was not identified. Item 1 indicates the franchisor is owned by its principal officers and does not appear to be controlled by a private equity firm. This suggests that management decisions may be more focused on the long-term health of the brand rather than short-term investor return timelines.

Potential Mitigations

• Your attorney should always confirm the ownership structure detailed in Item 1 to identify any controlling entities.
• Investigating the franchisor's long-term goals and mission can provide insight into their operational philosophy, a task for your business advisor.
• Reviewing the assignment clauses in the Franchise Agreement with your attorney is crucial to understand who could own the system in the future.

Explanation

This risk was not identified. Item 1 does not disclose a parent company. It does, however, clearly describe the relationship with its affiliate, oh DEER, Inc., from which it licenses the trademarks. The structure appears transparent, without a hidden parent entity controlling the franchisor.

Potential Mitigations

• A business advisor can help you understand the relationship between the franchisor and any disclosed affiliates, as detailed in Item 1.
• Your attorney should review the franchise agreement to determine if any obligations are guaranteed by an affiliate or other related company.
• It is wise to have your accountant review the financials of any affiliate that provides critical services or guarantees.

Explanation

This risk was not identified, as the franchisor does not list any predecessors in Item 1 of the FDD. This means you do not have to contend with potential inherited issues, past litigation, or negative history from a prior ownership entity.

Potential Mitigations

• Confirming the absence of a predecessor in Item 1 is a key due diligence step for your attorney.
• Reviewing the franchisor's own history in Items 1, 3, and 4 is still critical, even without a predecessor.
• A business advisor can help research the backgrounds of the founders to understand the full history of the business concept.

Explanation

This risk was not identified. Item 3 of the FDD discloses no current or past material litigation involving the franchisor, its predecessors, or its management. The absence of lawsuits, particularly claims of fraud or breach of contract from other franchisees, is a positive indicator of the health of the franchise relationship.

Potential Mitigations

• Your attorney should still consider performing an independent search for litigation not required to be disclosed in the FDD.
• Speaking with former franchisees listed in Item 20 can sometimes reveal disputes that did not escalate to formal litigation.
• Understanding the dispute resolution process in Item 17 with your attorney is important for assessing how future conflicts might be handled.