Explanation

This risk was not identified in the FDD Package. The number of franchised units has decreased over the last two years, indicating system contraction rather than rapid growth. While this avoids the risks of strained support systems from over-expansion, it raises different concerns about system health and franchisee success which are captured in the 'High Franchisee Turnover' risk.

Potential Mitigations

• A business advisor can help you assess the reasons for system contraction and what it may imply for future brand growth and support.
• Your accountant should analyze the franchisor's financial statements to see if they have sufficient resources to support the existing system.
• Discussing the company's strategic growth plans with the franchisor is a key step your attorney can help facilitate.

Explanation

This risk was not identified in the FDD Package. PrideStaff, Inc. (PrideStaff) has been in business since 1978 and franchising since 1995, as disclosed in Item 1. This indicates a long operational history and an established brand, rather than a new or unproven system. The risks associated with this franchise are more related to its current performance and contractual terms than its novelty.

Potential Mitigations

• Engaging a business advisor to review the franchisor’s long history can help identify its adaptability to market changes over time.
• Your attorney can investigate if there have been significant changes in ownership or strategy despite the long history.
• An accountant can analyze multi-year financial data to assess the long-term health and sustainability of the established system.

Explanation

This risk was not identified in the FDD Package. The business of providing temporary and permanent staffing services is a well-established sector of the economy and is not considered a fad. The long operating history of PrideStaff further suggests that the business model has sustained demand over various economic cycles.

Potential Mitigations

• A business advisor can help you research the current and projected demand for staffing services in your specific local market.
• Your accountant can help you model the financial performance of a staffing business to understand its sensitivities to economic cycles.
• Legal counsel can review the franchise agreement for any restrictions that might limit your ability to adapt to changes in the staffing industry.

Explanation

This risk was not identified in the FDD Package. Item 2 shows that the key executive team, including the Co-CEOs, have been with the company for decades (since 1986 and 1997). This indicates a very experienced management team with a long tenure in both the staffing industry and the franchise system itself, which is generally a positive factor.

Potential Mitigations

• A business advisor can still help you research the reputation of the management team within the franchising community.
• Speaking with current franchisees about their interactions with the leadership team can provide valuable insight.
• Your attorney can confirm if there have been any recent, significant changes in key management roles not yet reflected in the FDD.

Explanation

This risk was not identified in the FDD Package. According to Item 1, PrideStaff is a privately held corporation founded by George A. Rogers. There is no disclosure of ownership by a private equity firm. The board of directors appears to be composed of long-term executives and family members.

Potential Mitigations

• Your attorney can help you verify the corporate ownership structure through public records.
• A business advisor can help you understand the potential implications of family ownership and succession on the franchise system.
• Asking the franchisor about their long-term ownership plans is a reasonable due diligence step to perform with your business advisor.

Explanation

This risk was not identified in the FDD Package. Item 1 states that the franchisor has no parent company. The disclosures and financial statements provided are for the franchising entity, PrideStaff, Inc., itself. Therefore, the risk of a parent company's undisclosed financial status affecting the system is not applicable here.

Potential Mitigations

• Your attorney can verify the corporate structure to confirm the absence of a parent company.
• An accountant should focus their analysis on the financial health of the disclosed entity, PrideStaff, Inc.
• A business advisor can help you assess the risks and benefits of dealing with a franchisor that does not have a larger parent for financial backing.

Explanation

This risk was not identified in the FDD Package. Item 1 mentions the founder from 1978 as a predecessor in interest to the corporation formed in 1985, but does not disclose any other predecessor entities from which it acquired the business. The operational history appears to be continuous under the same core management.

Potential Mitigations

• Your attorney can conduct public record searches to confirm the corporate history and ensure no undisclosed predecessors exist.
• Speaking with long-term franchisees about the history of the company can provide valuable context.
• A business advisor can help you assess how the system has evolved since its founding.

Explanation

This risk was not identified in the FDD Package. Item 3 explicitly states that no litigation is required to be disclosed. This suggests an absence of recent, material legal disputes with franchisees, government agencies, or other parties that would meet the disclosure thresholds. This is a positive indicator.

Potential Mitigations

• Your attorney can still conduct independent searches for litigation history that may not have met the specific disclosure criteria of Item 3.
• Asking current and former franchisees about any past or pending disputes is a crucial due diligence step to perform with your attorney's guidance.
• A business advisor can help you understand common areas of dispute in the staffing franchise industry.