Explanation

This risk was not identified in the FDD package. Since Play PKL Franchising LLC (PKL) is a new franchisor with no operating franchisees, the tables in Item 20 show no history of franchisee terminations, non-renewals, or other cessations. While no negative data exists, this lack of history is a risk in itself, meaning there is no track record to evaluate system stability or franchisee satisfaction. This is better analyzed under the "New/Unproven Franchise System" risk.

Potential Mitigations

• A business advisor can help you assess the risks of joining a new system with no performance history to analyze.
• It is wise to have your accountant help you create very conservative financial projections due to the lack of historical franchisee data.
• Your attorney should help you understand how the lack of an operating history impacts your potential legal remedies.

Explanation

This risk was not identified in the FDD package. The data in Item 20 for Play PKL Franchising LLC (PKL) shows a system with only one affiliate-owned unit and zero franchised units. Therefore, there is no history of rapid franchise growth. The primary risk stems from the system being new and unproven, not from expanding too quickly for its support infrastructure to handle.

Potential Mitigations

• Speaking with a business advisor about the typical growth trajectory of a new franchise system can provide valuable context.
• Your accountant should review the franchisor’s capitalization to assess its ability to support future growth, should it occur.
• It may be beneficial to ask your attorney to inquire about the franchisor's planned growth rate and support staffing plans.

Explanation

This risk was not identified in the FDD package. A review of Item 1 and other ownership information for Play PKL Franchising LLC (PKL) does not indicate that the franchisor is owned or controlled by a private equity firm. Ownership appears to be held by the parent company, Play PKL, LLC, which is managed by the individuals listed in Item 2. Therefore, the specific risks associated with a private equity firm's short-term investment horizon do not appear to be present.

Potential Mitigations

• Your attorney can help you confirm the ownership structure of the franchisor and its parent company through public records.
• It is still prudent to ask your business advisor to research the background of the individual owners and their business philosophy.
• Discussing the long-term vision for the brand with the franchisor's management can provide insight into their commitment.

Explanation

This risk was not identified in the FDD package. Play PKL Franchising LLC (PKL) clearly discloses its parent company, Play PKL, LLC, in Item 1. While the parent's financial statements are not included, the franchisor entity itself has provided its own (albeit very limited) financials as required. The franchisor does not appear to be hiding the existence of its parent company, so this specific disclosure risk is not present.

Potential Mitigations

• An accountant can explain the relationship between a parent and subsidiary and the financial implications.
• Your attorney can help clarify which entity holds key assets, like intellectual property, and which entity holds the obligations to you.
• It is wise to request information on the financial health and commitment of the parent company, even if their statements are not required.

Explanation

This risk was not identified in the FDD package. According to Item 1, Play PKL Franchising LLC (PKL) is a new company and does not appear to have acquired its assets from a predecessor entity. The franchise system is being built from the ground up by the current management. Therefore, there are no predecessor entities whose historical performance or legal issues would need to be reviewed.

Potential Mitigations

• Your attorney can confirm the corporate history of the franchisor to ensure no predecessor entities exist.
• A business advisor can help you understand the difference in risk between a new system and one with a long, stable history.
• It is always a good practice to research the business history of the individual principals listed in Item 2.

Explanation

This risk was not identified in the FDD package. Item 3 of the FDD for Play PKL Franchising LLC (PKL) states that no litigation is required to be disclosed. This indicates that neither the franchisor nor its key personnel are currently involved in, or have recently concluded, material legal actions related to fraud, franchise law violations, or other relevant matters. The absence of such litigation is a positive sign, though it is expected for a brand-new system.

Potential Mitigations

• Your attorney can conduct independent public record searches to verify the absence of litigation.
• It is beneficial to establish a process for monitoring any future litigation that may be disclosed in subsequent FDDs.
• Talking to a business advisor can help put the litigation history (or lack thereof) of any franchisor into a broader industry context.