Explanation

This risk was not identified in the FDD package. The tables in Item 20 show no franchised outlets have terminated, ceased operations, or not renewed. This is expected, as PickleRage is a new franchise system that has not yet had any operating franchisees for a significant period. High turnover is a critical indicator of systemic problems, so this data should be monitored closely in future FDDs if you become a franchisee.

Potential Mitigations

• A business advisor can help you establish benchmarks for acceptable turnover rates within the industry for future reference.
• Should you proceed, maintaining open communication with other franchisees will provide early warnings of any systemic issues that might lead to future turnover.
• Your attorney can explain how high turnover disclosed in future FDDs could impact your rights and the system's health.

Explanation

This risk was not identified in the FDD. Item 20 data indicates the system is just beginning to add units and has no history of rapid growth. While not a current risk, should the system grow quickly in the future, a franchisor's support infrastructure can become strained, potentially diminishing the quality of assistance you receive. This is a factor to monitor in subsequent years if you invest.

Potential Mitigations

• It is wise to ask the franchisor about their strategic plans for scaling support infrastructure to match future franchise sales, a topic your business advisor can help you explore.
• Before investing, an accountant can review the franchisor's capitalization to assess its ability to fund future support needs.
• Your attorney can help you understand the support obligations detailed in the Franchise Agreement.

Explanation

This risk was not identified in the FDD. Item 2 lists several executives with significant prior experience in franchising with other established brands (e.g., World Gym, Tommy's Express, HoneyBaked Ham), in real estate and construction, and in high-end health and fitness operations. This level of disclosed experience may mitigate some of the risks associated with a new franchise system.

Potential Mitigations

• Even with experienced management, it is wise to have a business advisor help you research the specific track records of key executives at their prior companies.
• You should still speak with the initial franchisees listed in Item 20 to gauge the quality of support they are receiving from this management team.
• Your attorney can confirm that the management team's experience aligns with the support obligations promised in the Franchise Agreement.

Explanation

This risk was not identified in the FDD. According to Item 1, the franchisor, PickleRage Franchise LLC, is a subsidiary of PickleRage LLC, its corporate parent. It does not appear to be owned by a private equity firm. However, the dynamics of a parent-subsidiary relationship can still influence franchisor priorities, a factor to consider.

Potential Mitigations

• Engaging a business advisor to research the parent company and its leadership can provide insight into their overall business philosophy and long-term strategy.
• Your attorney should carefully review the franchise agreement for any clauses related to assignment or change of control.
• An accountant can analyze the consolidated financial picture, if available, to understand the parent's stability and resources.

Explanation

This risk was not identified. Item 1 of the FDD does not list any predecessors for PickleRage Franchise LLC. As a newly formed entity that began franchising in late 2023, this is expected. In franchising, a predecessor is a company from which the franchisor acquired the business, and its history (e.g., litigation, bankruptcy) would be a critical part of due diligence.

Potential Mitigations

• It is always good practice for your attorney to verify corporate history through public records to confirm the absence of undisclosed predecessors.
• A business advisor can help research the background of the founders to see if they were involved in prior, similar ventures.
• An accountant reviewing the financials can confirm the formation dates and lack of acquired assets that might indicate a predecessor.

Explanation

This risk was not identified in the FDD. Item 3 states that no litigation information is required to be disclosed. For a new franchisor, this is not unusual. However, a pattern of litigation, especially claims of fraud or misrepresentation brought by franchisees, is a major red flag in more established systems, often indicating systemic problems.

Potential Mitigations

• Your attorney can perform an independent public records search to verify that no material litigation has been omitted.
• A key part of due diligence is asking existing franchisees if they are aware of any disputes, even if they haven't escalated to litigation.
• A business advisor can help you understand common areas of dispute in franchising to be aware of moving forward.