Explanation

This risk was not identified in the FDD Package. Rapid, uncontrolled growth can strain a franchisor's ability to provide adequate support to new and existing franchisees. Analyzing multi-year growth in Item 20 against the franchisor's financial capacity in Item 21 is important to ensure support systems are not being outpaced by franchise sales.

Potential Mitigations

• Your business advisor can help you analyze the growth trajectory disclosed in Item 20 to assess if it appears stable and sustainable.
• An accountant's review of Item 21 financials is useful for determining if the franchisor has the resources to support its current system size and growth.
• Asking existing franchisees about the quality and timeliness of franchisor support can provide insight into whether resources are strained.

Explanation

This risk was not identified in the FDD Package. Pro-Lift Doors Franchise, LLC began offering franchises in September 2015. A new system lacks a long-term performance track record and may have underdeveloped support structures. For any new franchise, it is vital to scrutinize management's experience, the business model's viability, and the financial stability of the company.

Potential Mitigations

• A careful review of management's industry and franchising experience in Item 2 should be conducted with your business advisor.
• Your accountant should assess the financial statements in Item 21 to ensure the company is well-capitalized.
• Contacting the earliest franchisees listed in Item 20 is important to learn about their experience with the system from its inception.

Explanation

This risk was not identified in the FDD Package. The garage door repair and installation industry represents a long-standing home service sector, not a temporary trend. Businesses tied to fads carry a higher risk of failure once consumer interest diminishes, potentially leaving you with long-term contractual obligations for an obsolete business.

Potential Mitigations

• Researching the long-term demand and competitive landscape for the industry with your business advisor is a sound practice.
• You should evaluate the franchisor's plans for innovation and adaptation to market changes with your financial advisor.
• Your attorney can review the franchise agreement term to ensure you have a reasonable opportunity to build a sustainable business.

Explanation

This risk was not identified in the FDD Package. Item 2 indicates that the key executives have substantial experience managing franchise systems under the parent company, Premium Service Brands. When evaluating a franchise, it is crucial to assess whether management has relevant experience in both the specific industry and in the business of franchising, as a lack of either can negatively impact franchisee support and system strategy.

Potential Mitigations

• A business advisor can help you evaluate the resumes of the management team in Item 2.
• It is always wise to ask existing franchisees about their direct experiences with the leadership team's competence and support.
• Your attorney can help you understand the stability of the management team by looking for recent turnover in Item 2.

Explanation

This risk was not identified in the FDD Package. The franchisor's parent company, Premium Service Brands, LLC, is disclosed in Item 1, and its audited financial statements and a guarantee of performance are provided in Exhibit B. It is important that parent companies are disclosed, as their financial health and operational control can directly impact the franchisor's ability to support you.

Potential Mitigations

• Your attorney should always verify that the FDD properly discloses all parent and affiliate entities in Item 1.
• When a parent company guarantees performance, it is important to have your accountant review its financial statements for stability.
• Understanding the legal and operational relationship between the franchisor and its parent is a key part of due diligence your attorney can assist with.

Explanation

This risk was not identified in the FDD package. FDD Item 1 requires disclosure of any business predecessors. Reviewing a predecessor's history is important as it can reveal inherited issues, such as past litigation (Item 3), bankruptcies (Item 4), or high franchisee turnover, that may still affect the current franchise system.

Potential Mitigations

• Your attorney should carefully review Item 1 for any disclosed predecessors and related information in Items 3 and 4.
• Speaking with long-term franchisees who may have operated under a predecessor can provide valuable historical context.
• A business advisor can assist you in researching the public records of any predecessor entity for potential red flags.