Explanation

This risk was not identified. The FDD provides audited financial statements for Spring-Green Lawn Care Corp. (SGLC), which guarantees the obligations of the franchisor, Pet Butler, LLC (Pet Butler). The guarantor's financials show consistent profitability and a strong balance sheet. This structure suggests financial backing, which is a positive factor for a franchisee. However, your contract is with Pet Butler, not directly with the guarantor.

Potential Mitigations

• An accountant should review the guarantor's financial statements to confirm its financial health and discuss the real-world protections offered by the guarantee.
• Your attorney should examine the Guarantee of Performance document in Exhibit F to determine its strength and enforceability.
• A business advisor can help you assess the risks associated with the corporate structure, where the contracting entity is separate from the financial guarantor.

Explanation

This risk was not identified. The FDD's Item 20 data shows low franchisee turnover rates over the past three years. The number of terminations and cessations is small relative to the total number of franchisees, and the system has demonstrated net growth in franchised outlets. Low turnover is generally a positive indicator of system health and franchisee satisfaction.

Potential Mitigations

• It is still beneficial for your accountant to review the Item 20 tables to independently verify turnover calculations.
• Contacting franchisees from the lists in Exhibits D and E can provide valuable firsthand insight into their experiences with the system.
• Your attorney can help you formulate insightful questions for former franchisees to understand their specific reasons for leaving the system.

Explanation

This risk was not identified in the FDD. The franchise system's growth, as detailed in Item 20, appears to be at a moderate and sustainable pace. The financial statements of the guarantor also suggest sufficient resources are available to support the current growth rate. Uncontrolled, rapid growth can sometimes strain a franchisor's ability to provide quality support to all its franchisees.

Potential Mitigations

• A business advisor can help you question the franchisor about their plans for scaling support infrastructure to match future unit growth.
• When speaking with existing franchisees, asking about the current quality and responsiveness of franchisor support is a key due diligence step.
• An accountant's review of the guarantor's financials can help confirm if they have the resources to support continued expansion.

Explanation

This risk does not appear to be present. While Pet Butler began franchising under its current ownership in 2017, it acquired a system that started in 2010. Furthermore, its affiliate and guarantor, SGLC, has been in the franchising business since 1977. This extensive history and affiliate experience significantly mitigate the risks typically associated with a new or unproven franchise system.

Potential Mitigations

• Engaging a business advisor to review the management team's history in both this industry and franchising can provide additional comfort.
• Speaking with the earliest franchisees under the current ownership can give you insight into the system's evolution and support quality.
• Your attorney can help you understand the legal relationship between Pet Butler and its experienced parent and affiliate companies.

Explanation

This risk was not identified. The business of pet waste removal caters to a recurring need driven by pet ownership, which is a stable and long-term market driver. The services offered do not appear to be based on a short-lived trend or fad, suggesting a greater potential for long-term market viability and sustained consumer demand.

Potential Mitigations

• A business advisor can help you research the long-term market demand and competitive landscape for pet-related services in your specific area.
• It is wise to assess the business model's resilience to economic downturns with your financial advisor.
• Asking the franchisor about plans for service innovation can provide insight into their long-term vision.

Explanation

This risk was not identified. Item 2 of the FDD indicates that the franchisor's key executives have extensive experience with the affiliate franchisor, Spring-Green, which has operated for decades. This suggests the management team possesses significant experience in both the service industry and in managing a franchise system, which is a positive factor.

Potential Mitigations

• A thorough review of the executive biographies in Item 2 with your business advisor is still a prudent step.
• When speaking with franchisees, you can ask about their direct experiences with the management team's competence and support.
• Your attorney can help you understand the roles and responsibilities of the key personnel listed.

Explanation

This risk was not identified. The disclosures in Item 1 do not indicate that the franchisor is owned or controlled by a private equity firm. The ownership structure appears to be a network of privately-held affiliated companies. Therefore, the specific risks often associated with private equity ownership, such as a focus on short-term returns over long-term system health, do not appear to be present here.

Potential Mitigations

• Your attorney can help you verify the corporate structure and ownership details disclosed in Item 1.
• During franchisee validation calls, you can inquire about any recent changes in ownership or management philosophy.
• A business advisor can help you research the history of the affiliated companies for a more complete picture.

Explanation

This risk was not identified. The FDD appears transparent regarding its corporate structure. Item 1 clearly discloses the parent and affiliate companies, and Item 21 provides audited financial statements for the guarantor, SGLC, along with a copy of the Guarantee of Performance. This level of disclosure provides important visibility into the financial backing of the franchisor.

Potential Mitigations

• An accountant should review the provided guarantor financials and the terms of the guarantee to assess the level of financial security it offers.
• It is valuable for your attorney to confirm that all required parent and affiliate disclosures have been properly made.
• Your business advisor can help you understand the operational relationships between the various affiliated entities mentioned in Item 1.

Explanation

The FDD discloses that the franchisor's predecessor, HomeTask, Inc., was subject to a regulatory consent order in Maryland in 2013. This action was related to a different franchise brand (Yellow Van Handyman) that HomeTask operated. While this event did not involve the Pet Butler brand and is over a decade old, it is part of the system's lineage and indicates a past regulatory issue with the predecessor company.

Potential Mitigations

• A discussion with your attorney is important to understand the details and potential implications of this past regulatory action.
• You should ask the franchisor what changes have been implemented since 2013 to prevent similar issues from occurring.
• Reviewing the current franchisor's litigation history for any similar patterns is a crucial step for your attorney.

Explanation

This risk was not identified. Item 3 discloses a single regulatory action against a predecessor entity from over a decade ago related to a different brand, but it does not indicate a pattern of litigation against the current franchisor, Pet Butler. The absence of a history of lawsuits alleging fraud, misrepresentation, or significant disputes with franchisees is generally a positive sign.

Potential Mitigations

• Your attorney can still conduct an independent search for litigation involving the franchisor as part of thorough due diligence.
• Asking current franchisees about their relationship with the franchisor and any disputes they are aware of is a practical verification step.
• A business advisor can help you assess the overall health of the franchisor-franchisee relationship based on your research.