Explanation

The non-medical home care industry is established and not typically considered a fad. OYLHF provides services with ongoing consumer demand. The FDD does not suggest the business model is based on a short-term trend. The franchisor appears focused on a durable market segment, reducing the risk that your business's value will diminish due to waning consumer interest in a passing trend. This specific risk was not identified as a major concern in the FDD package.

Potential Mitigations

• A business advisor can help you research the long-term outlook and competitive landscape for the home care industry in your specific market.
• Discuss the sustainability of the business model and its resilience to economic shifts with your financial advisor.
• Your attorney should review the franchise agreement for any long-term obligations that could be problematic if market demand were to shift unexpectedly.

Explanation

This risk was not identified in the FDD package. There is no disclosure in Item 1 indicating that OYLHF is owned or controlled by a private equity firm. Private equity ownership can be a concern because their typical focus on short-term returns may not always align with the long-term health of franchisees. This includes potential risks like increased fees, reduced support, or a quick resale of the entire franchise system.

Potential Mitigations

• Your attorney can help you verify the ownership structure of the franchisor through public records to confirm the absence of undisclosed controlling entities.
• A business advisor can explain the typical business models of private equity firms and the potential impact on franchise relationships.
• It is wise to ask the franchisor about any plans for future sales of the company.

Explanation

The FDD discloses an affiliate, Parents First Homecare, Inc., which operated a similar business and is the basis for the affiliate-owned location data in Item 19. However, the audited financial statements in Item 21 are only for OYLHF, the franchisor entity. The FDD does not contain financial statements for the affiliate or any parent company, nor does it appear to be required. This means your visibility into the overall financial health of the related entities is limited.

Potential Mitigations

• Your accountant should review the affiliate relationship described in Item 1 and the related party transactions noted in the financials.
• An attorney can help clarify the legal and financial separation between the franchisor and its affiliates.
• Ask the franchisor to explain the financial relationship and any dependencies between OYLHF and Parents First Homecare, Inc.

Explanation

OYLHF does not disclose any predecessors. It states it was formed in 2018 and has not acquired any other businesses. It does mention an affiliate, Parents First Homecare, Inc., that previously operated a similar business. The history of this affiliate is relevant to operational experience but does not constitute a 'predecessor' in the legal sense that would require disclosure of its past litigation or bankruptcy history, if any. Therefore, this specific risk was not identified.

Potential Mitigations

• An attorney can confirm the legal distinction between a predecessor and an affiliate and explain the different disclosure requirements.
• Your business advisor can help you research the public history of the affiliate, Parents First Homecare, Inc., for any relevant information.
• Asking current franchisees who may have been aware of the affiliate's history is a valuable part of due diligence.

Explanation

Item 3 of the FDD states, "No litigation is required to be disclosed in this Item." This indicates there is no current, pending, or recent history of the specific types of material litigation that must be reported under FTC rules, such as actions involving fraud, violation of franchise law, or other significant claims. The absence of such litigation is a positive indicator, though it does not guarantee a dispute-free relationship.

Potential Mitigations

• Your attorney should confirm that the 'no litigation' statement meets all disclosure requirements under federal and state law.
• It is still advisable to ask current and former franchisees about any disputes they may have had, even if they didn't result in litigation.
• A business advisor can help you perform independent online searches for any news reports or other public information regarding the franchisor.