Explanation

This risk was not identified in the FDD Package. As a new franchisor in the United States, there is no operating history and therefore no franchisee turnover data to report in Item 20. While this is expected, it also means you cannot use this critical data point to assess franchisee satisfaction, system profitability, or potential operational issues. A lack of track record is itself a form of risk.

Potential Mitigations

• Given the lack of US data, it is critical to perform enhanced due diligence on the brand's performance and franchisee relations in its home market (the UK).
• A business advisor can help you find and analyze any available public information or industry reports about the brand's international operations.
• Your attorney can help you frame questions to the franchisor about their international franchisee turnover rates and the reasons behind them.

Explanation

This risk was not identified in the FDD Package, as there are no open US locations. However, franchising is a business that relies on scale for support, and a system that grows too quickly can strain its resources, leading to poor franchisee support. The requirement for Area Developers to open a minimum of 20 stores suggests a plan for rapid growth, which could present future challenges for the franchisor's support infrastructure.

Potential Mitigations

• It is wise to ask the franchisor about their specific plans to scale their US-based support staff and infrastructure to match their growth projections.
• A discussion with your business advisor about the franchisor's capacity for controlled growth would be beneficial.
• Consulting with your attorney about contractual service level agreements for support could help mitigate risks from future rapid expansion.

Explanation

This specific risk was not identified in the FDD Package. The business model is centered on pizza, a well-established and enduring consumer product, not a temporary trend. The brand itself has operated internationally since 1965, demonstrating long-term market presence, although it is new to the US. Therefore, the risk that the core business concept is a short-lived fad appears to be low.

Potential Mitigations

• A business advisor can help you analyze the specific market niche PizzaExpress US aims to fill within the competitive US pizza industry.
• It is prudent to evaluate the long-term consumer appeal of the brand's specific style and price point in your local area.
• Your financial advisor can assist in assessing the business model's resilience against economic shifts and changing consumer tastes.

Explanation

This risk was not identified in the FDD Package. The franchisor is transparent in Item 1 about its complex multi-level parent structure. The notes to the financial statements in Exhibit D also discuss the parent entities. The risk is not a failure to disclose the parent, but rather the financial condition of the parent group itself, which is addressed in the 'Disclosure of Franchisor's Financial Instability' risk.

Potential Mitigations

• An accountant should review the organizational structure to understand the flow of funds and support between the various corporate layers.
• It is wise to have your attorney clarify which entity is responsible for key obligations to you under the Franchise Agreement.
• A business advisor can help you understand the potential strategic implications of such a complex international ownership structure.

Explanation

This risk was not identified in the FDD Package. Item 3 states that there is no litigation that requires disclosure. The absence of lawsuits against the franchisor is a positive indicator, but it is also expected for a company that has only just begun offering franchises in the US. You should still perform your own due diligence, as not all disputes necessarily result in litigation disclosed in this Item.

Potential Mitigations

• Performing online searches for news articles or complaints related to the franchisor's international operations can be a useful step.
• Asking current international franchisees about the nature of disputes within the system can provide insight your business advisor can help analyze.
• Your attorney can advise on the types of litigation that are required to be disclosed to ensure you understand the limitations of Item 3.