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PacLease

Initial Investment Range

$454,250 to $904,250

Franchise Fee

$4,250

PacLease franchises operate commercial truck leasing and rental businesses.

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PacLease February 20, 2025 FDD Risk Analysis

Free FDD Library AI Analysis Date: July 16, 2025

DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.

1

Franchisor Stability Risks

Start Here
Total: 10
0
1
9

Disclosure of Franchisor's Financial Instability

Medium Risk

Explanation

The franchisor's parent, PACCAR Financial Corp. (PACCAR Leasing), shows a trend of declining net income over the past three years in its audited financial statements, even as revenues have grown. This may indicate pressure on profitability. However, the company remains profitable with a strong, positive net worth and is backed by a formal Support Agreement from its ultimate parent, PACCAR Inc., which mitigates the risk of financial instability.

Potential Mitigations

  • Your accountant should review the complete audited financial statements in Exhibit K, including all notes, paying close attention to the declining profitability trend and the terms of the parent Support Agreement.
  • Discuss the reasons for the declining net income with the franchisor and how they plan to address it; your business advisor can help frame these questions.
  • An assessment of the parent company's (PACCAR Inc.) financial health should be performed by your financial advisor to understand the strength of the support agreement.
Citations: Item 21, Exhibit K

High Franchisee Turnover

Low Risk

Explanation

This risk was not identified in the FDD package. Item 20 data shows very low franchisee turnover, with no terminations or non-renewals reported in the last three years. A high turnover rate can be a strong indicator of systemic problems, such as lack of profitability or poor franchisor support, so its absence here is a positive sign for the health of the franchise system.

Potential Mitigations

  • Even with low reported turnover, it is valuable to contact former franchisees listed in Item 20 to understand their reasons for leaving, a process your attorney can help guide.
  • Discussing franchisee satisfaction and the franchisor-franchisee relationship with a range of current franchisees is a key due diligence step your business advisor can help you with.
  • Your accountant should help you analyze the Item 20 tables for any subtle trends over the three-year period.
Citations: Not applicable

Rapid System Growth

Low Risk

Explanation

This risk was not identified in the FDD package. While Item 20 data shows consistent growth in the number of franchised outlets, the pace appears steady and manageable for a large, established company like PACCAR Leasing. Rapid growth can sometimes strain a franchisor's ability to provide adequate support, so controlled growth is generally a positive indicator.

Potential Mitigations

  • In discussions with current franchisees, you can inquire about the quality and timeliness of support to gauge if the system's resources are keeping pace with growth; your business advisor can help with this.
  • Questions about the company's infrastructure for franchisee support can be directed to the franchisor.
  • Reviewing the franchisor's financial statements with an accountant can provide insight into their investment in support services.
Citations: Not applicable

New/Unproven Franchise System

Low Risk

Explanation

This risk was not identified in the FDD package. Item 1 and Item 7 note that PACCAR Leasing has been in the truck leasing business for 45 years. The company is a division of a major, long-standing public corporation, and Item 20 shows a large, mature network of over 400 outlets. An unproven system carries higher risks, so the extensive history here is a significant positive factor.

Potential Mitigations

  • With your business advisor, you can still investigate the brand's reputation and history within the commercial trucking industry.
  • Speaking with long-term franchisees can provide valuable perspective on the system's evolution and stability.
  • Your attorney can confirm the corporate history as disclosed in Item 1.
Citations: Not applicable

Possible Fad Business

Low Risk

Explanation

This risk was not identified. The franchise operates in the commercial truck leasing and rental industry, a mature and essential component of the national logistics and transportation sector. This type of business is based on long-term commercial needs rather than a fleeting consumer trend, suggesting a stable market.

Potential Mitigations

  • It is still prudent to have your business advisor help you research the long-term outlook and competitive landscape of the commercial truck leasing industry.
  • An accountant can help you model the business's resilience to various economic cycles.
  • Discuss the industry's future with current franchisees to gauge their long-term confidence.
Citations: Not applicable

Inexperienced Management

Low Risk

Explanation

This risk was not identified in the FDD package. Item 2 details the backgrounds of the franchisor's key executives, revealing extensive, long-term careers with PACCAR Leasing, its parent companies, or other major competitors in the truck leasing industry. Experienced leadership is crucial for providing effective support and strategic direction.

Potential Mitigations

  • A business advisor can help you perform independent research on the reputation of the key executives within the industry.
  • When speaking with franchisees, you can inquire about their direct experiences and impressions of the leadership team.
  • Your attorney can verify that the experience disclosed in Item 2 is consistent with public records.
Citations: Not applicable

Private Equity Ownership

Low Risk

Explanation

This risk was not identified. Item 1 indicates PACCAR Leasing is part of PACCAR Inc., a publicly-traded company, not a private equity firm. Private equity ownership can sometimes introduce risks related to short-term profit motives over the long-term health of the brand, so its absence is noteworthy.

Potential Mitigations

  • Your attorney can verify the corporate ownership structure as disclosed in the FDD.
  • You can research the history and governance of the parent company, PACCAR Inc., with your business advisor.
  • An accountant can analyze the financial statements to confirm the nature of the company's capitalization.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified. Item 1 of the FDD clearly discloses the franchisor's parent company, PACCAR Financial Corp., and its ultimate parent, PACCAR Inc. Furthermore, Item 21 provides the audited financial statements for PACCAR Financial Corp. Clear disclosure of parent companies and their financial standing is crucial for assessing the overall stability and support structure of the franchise system.

Potential Mitigations

  • It is important for your accountant to review the provided parent financial statements in Exhibit K.
  • Your attorney can confirm that the disclosures regarding parent entities and any associated guarantees are clear and complete.
  • You should discuss the relationship between the franchisor and its parent companies with your business advisor.
Citations: Not applicable

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD package. Item 1 does not disclose any predecessors for PACCAR Leasing, indicating a continuous operating history under the same corporate umbrella. A lack of predecessor history simplifies due diligence, as there are no past business failures or issues under a different name to investigate.

Potential Mitigations

  • Your attorney can help you verify the corporate history of the franchisor to confirm the absence of any undisclosed predecessors.
  • You can research the company's long-standing reputation in the industry with your business advisor.
  • Speaking with long-tenured franchisees can provide anecdotal confirmation of the company's history.
Citations: Not applicable

Pattern of Litigation

Low Risk

Explanation

This risk was not identified in the FDD package. Item 3 explicitly states that no litigation is required to be disclosed. A pattern of litigation, especially lawsuits from franchisees alleging fraud or breach of contract, can be a major red flag about the franchisor's practices and the health of the system. The absence of such disclosures is a significant positive finding.

Potential Mitigations

  • While none is disclosed, your attorney can conduct independent searches of court records as an extra due diligence step.
  • When speaking with current and former franchisees, you can ask about their awareness of any legal disputes within the system.
  • A business advisor can help you search for news articles or online discussions related to the franchise that might mention disputes.
Citations: Not applicable
2

Disclosure & Representation Risks

Total: 15
1
0
14

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

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3

Financial & Fee Risks

Total: 10
4
2
4

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

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4

Legal & Contract Risks

Total: 16
5
2
9

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

5

Territory & Competition Risks

Total: 5
4
0
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

6

Regulatory & Compliance Risks

Total: 10
3
5
2

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

7

Franchisor Support Risks

Total: 4
2
0
2

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

8

Operational Control Risks

Total: 12
5
4
3

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

9

Term & Exit Risks

Total: 18
1
2
15

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

10

Miscellaneous Risks

Total: 1
0
1
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.