Explanation

This risk was not identified. Item 21 does not provide financial statements for the franchisor, Petro Franchise Systems LLC. Instead, it provides audited consolidated financial statements for the guarantor, BP Corporation North America Inc. (BPCNA). These financials show substantial profits and positive equity, indicating the guarantor is financially stable. A financially stable guarantor is important as it suggests they can support the franchise system and fulfill their obligations.

Potential Mitigations

• Have your accountant review the guarantor's complete audited financial statements, including all footnotes, to assess its financial health and ability to support the franchisor.
• An attorney should review the Guaranty of Performance in Exhibit H to confirm its terms and enforceability.
• Discuss the franchisor's reliance on its parent company for support with a business advisor.

Explanation

This risk was not identified. Item 20 data shows the number of franchised outlets has been stable or slightly declining over the past three years, not rapidly expanding. While slow growth can have its own risks, the specific challenges associated with a franchisor's support systems being overwhelmed by rapid expansion do not appear to be present here. Stable growth can allow a franchisor to provide more consistent support.

Potential Mitigations

• Discuss the franchisor's long-term growth and support strategy with their management and your business advisor.
• Ask current franchisees about the quality and consistency of the support they receive from the franchisor.
• An accountant can review the guarantor's financials to see how they invest in franchisee support systems.

Explanation

This risk was not identified. Item 1 indicates that Petro Franchise Systems LLC has been offering franchises since 2008, and its predecessors have been franchising since 1984. This demonstrates a long history in the industry and suggests that the business model and support systems are well-established. An established system generally reduces the risks associated with unproven concepts or inexperienced management.

Potential Mitigations

• A business advisor can help you review the company's long history and evolution to understand its stability.
• Speaking with long-term franchisees can provide insight into the system's consistency and support over time.
• Your attorney should review the FDD for any recent major changes in ownership or strategy that might affect the established system.

Explanation

This risk was not identified. The franchise operates full-service travel centers and truck stops, a well-established industry with sustained demand tied to commercial transportation and highway travel. This is not a business model based on a fleeting trend. The long-term nature of the industry provides a more stable foundation, though it is still subject to economic cycles and competition, which a business advisor can help you evaluate.

Potential Mitigations

• A business advisor can help you research the long-term trends and economic outlook for the commercial travel center industry.
• Review the franchisor's plans for adapting to industry changes, such as electric vehicle charging, with their management.
• An accountant can help you model financial performance based on historical industry data and economic forecasts.

Explanation

This risk was not identified. Item 2 details the business experience of the management team, revealing that key executives have extensive backgrounds in the convenience retail, fuel, and franchise industries, including high-level positions at companies like 7-Eleven and BP. Furthermore, Item 11 notes that key training staff have decades of experience. This level of experience suggests a strong capacity for managing the franchise system.

Potential Mitigations

• A business advisor can help you assess the strength and track record of the management team outlined in Item 2.
• When speaking with current franchisees, inquire about their direct experiences and the quality of support from the leadership team.
• Your attorney should review Item 2 for any recent, rapid turnover in key management positions.

Explanation

This risk is not present as described. Item 1 indicates the franchisor is owned by BP, a major global energy company, not a private equity firm. This means the ownership focus is more likely on long-term strategic integration rather than short-term financial returns typical of PE funds. However, you should still consider the impact of this recent large-scale acquisition on the franchise system's culture, support, and strategic direction.

Potential Mitigations

• Discuss the recent acquisition by BP with current franchisees to understand any changes in support or company direction.
• A business advisor can help you research BP's strategy regarding its retail and franchise operations.
• Your attorney should review the FDD for any changes made since the acquisition was finalized.

Explanation

This risk was not identified. Item 1 of the FDD provides a detailed description of the franchisor's ownership structure, clearly identifying its parent, TravelCenters of America Inc., its ultimate parent, BP p.l.c., and the guarantor, BP Corporation North America Inc. Furthermore, Item 21 provides audited financial statements for the guarantor. This level of transparency is consistent with franchise disclosure requirements.

Potential Mitigations

• Your attorney should confirm that the disclosed ownership structure and the provided guaranty are clear and legally sound.
• An accountant should verify that the financial statements provided are for the correct guaranteeing entity as described in Item 1 and Exhibit H.
• A business advisor can help you understand the relationships between the various affiliated companies.

Explanation

This risk was not identified. While Item 1 discloses a history of predecessors dating back to 1984, Items 3 and 4 do not reveal any specific bankruptcy or litigation history directly tied to the franchising operations of those predecessors. The litigation history disclosed pertains to the current parent companies and is addressed under the 'Pattern of Litigation' risk. A clean history for the direct predecessors is a positive sign.

Potential Mitigations

• Your attorney should review the FDD's descriptions of predecessors in Items 1, 3, and 4 to confirm the absence of direct franchising-related issues.
• When speaking with long-term franchisees, ask about their experiences under any previous ownership or predecessor entities.
• A business advisor can help you research the history of the Petro brand and its previous owners.