Explanation

This risk was not identified. FDD Item 20 data shows the franchise system has been shrinking over the past two years, not growing rapidly. When evaluating other franchises, rapid growth can be a concern if it outpaces the franchisor's ability to provide adequate training and support, potentially diluting brand quality and franchisee assistance.

Potential Mitigations

• When analyzing a different franchise, ask your business advisor to help assess if the franchisor's support infrastructure is capable of handling its growth rate.
• An accountant's review of a franchisor's financials can reveal if they are reinvesting in support systems to match expansion.
• Your attorney can help you understand the support commitments detailed in any franchise agreement.

Explanation

This risk was not identified. FDD Item 1 indicates the franchisor has been operating and offering franchises under various names since 2006. For other opportunities, an unproven system can present risks such as an untested business model, minimal brand recognition, and a lack of established support infrastructure, which should be carefully evaluated with your advisors.

Potential Mitigations

• When considering a new franchise, engaging a business advisor to thoroughly vet the business model and its track record is wise.
• For any franchise, an attorney's review of the management team's experience as disclosed in Item 2 is a key due diligence step.
• Your accountant can assess if a new franchisor has sufficient capitalization to support its initial growth phase.

Explanation

This risk is not indicated. The business of garage and home organization is a well-established segment of the larger home improvement industry, not a temporary fad. When evaluating other opportunities, it is important to consider if the product or service caters to a lasting consumer need versus a fleeting trend, as a fad's decline could jeopardize your long-term investment.

Potential Mitigations

• A business advisor can help you research the long-term market trends for any industry you are considering entering.
• Assessing a franchisor's plans for innovation and adaptation to changing consumer tastes is a crucial part of due diligence.
• Your financial advisor can help model the potential impact of market shifts on your investment's viability.

Explanation

This risk was not identified. FDD Item 2 indicates that the key executives of the franchisor and its parent companies have extensive experience in franchising and managing large corporations. When evaluating other FDDs, inexperienced management could be a major concern, potentially leading to poor strategic decisions and inadequate franchisee support.

Potential Mitigations

• A thorough review of the executive biographies in Item 2 with your business advisor is a critical step in evaluating any franchise.
• Speaking with current franchisees can provide insight into the quality and effectiveness of the management team's support.
• Your attorney can help you understand the contractual commitments for support from the franchisor, regardless of who is on the management team.

Explanation

This risk was not identified. FDD Item 1 discloses that the ultimate parent company is a large, family-owned enterprise, not a private equity firm. When considering other franchises, PE ownership can introduce risks related to short-term profit motives, which may not always align with the long-term health of the franchisees and the brand.

Potential Mitigations

• Your attorney should always help you research the ownership structure of a franchisor and any parent companies.
• If a franchisor is PE-owned, a business advisor can help investigate the firm's track record with other franchise brands.
• Speaking with franchisees about any changes since an ownership transition can provide valuable insights.

Explanation

This risk was not identified. The FDD clearly discloses the parent and ultimate parent companies in Item 1. For other franchises, if a franchisor is a thinly capitalized subsidiary, it is critical that the parent's role and financial backing are clearly understood, and it may be necessary for the parent to provide audited financial statements for a complete risk assessment.

Potential Mitigations

• It is important for your attorney to review Item 1 to understand the full corporate structure, including any parent companies or affiliates.
• Your accountant should assess if the provided financial statements are sufficient or if parent company financials might be needed for a full picture.
• If a parent company provides a guarantee, your attorney should carefully examine the terms of that guarantee.

Explanation

This risk was not identified. The FDD discloses the company's internal history of brand and name changes but does not list any legal predecessors from which it acquired the business. When evaluating other franchise systems, a predecessor's negative history of bankruptcy, litigation, or high franchisee failure could be a significant red flag that warrants further investigation with your attorney and business advisor.

Potential Mitigations

• A close review of Item 1 with your attorney is essential to understand the full history of the franchise system, including any predecessors.
• If a predecessor is identified, a business advisor can help you research its history and reputation.
• Speaking with long-term franchisees who operated under a predecessor can offer unique historical perspective.

Explanation

This risk was not identified. FDD Item 3 does not disclose a pattern of litigation against OS LLC alleging fraud, misrepresentation, or similar claims. When reviewing other FDDs, a history of such litigation can be a significant warning sign about the franchisor's business practices and should be discussed in detail with your franchise attorney.

Potential Mitigations

• Your attorney should always scrutinize Item 3 for any disclosures of litigation, paying close attention to the nature and frequency of claims.
• If litigation is disclosed, a business advisor can help you assess its potential impact on the franchisor's finances and reputation.
• It is important to discuss any disclosed litigation with current franchisees to get their perspective.