Explanation

This specific risk was not identified in the FDD package. The franchise system is new, having only started selling franchises in 2023, so there is no historical data on franchisee turnover, terminations, or non-renewals yet. The absence of this data is due to the system's infancy, which is a risk in itself covered under 'New/Unproven Franchise System.' You will be among the first franchisees, so there are no past franchisee failures to analyze.

Potential Mitigations

• Once franchisees begin operating, it's wise to monitor future FDDs for turnover data, which your business advisor can help you track.
• Establishing strong communication with fellow early-stage franchisees can provide insight into system health as it develops.
• Working with an accountant to create conservative financial projections is critical, as there is no franchisee performance history to rely on.

Explanation

This specific risk was not identified in the FDD. Item 2 indicates that the founder and CEO, Lauren Rampello Becotte, has over eight years of direct operational experience running the Pure Glow studio concept since 2015. While some other executives are new to the company, the core leadership appears to have substantial, relevant experience in the specific business being franchised. This reduces the risk associated with inexperienced management.

Potential Mitigations

• It is still prudent to ask the franchisor about the specific franchising experience of their leadership team.
• A business advisor can help you formulate questions for existing franchisees about the quality and effectiveness of the management team's support.
• Verifying the backgrounds of key executives mentioned in Item 2 through online professional networking sites can provide additional context.

Explanation

This specific risk was not identified in the FDD. Item 1 indicates the franchise is owned by its parent company, Pure Glow Tanning LLC, and does not disclose any ownership by a private equity firm. The risks typically associated with PE ownership, such as a focus on short-term returns over long-term system health, do not appear to be present based on the provided documents. The ownership structure seems to be founder-led.

Potential Mitigations

• Verifying the corporate structure and ownership with your attorney is a good practice to confirm the absence of PE involvement.
• During discussions with existing franchisees, asking about their perception of the franchisor's long-term commitment can be insightful.
• Your business advisor can help you research the parent company to ensure no hidden ownership complexities exist.

Explanation

This specific risk was not identified in the FDD. Item 1 clearly discloses the parent company, Pure Glow Tanning LLC, and other affiliates. The franchisor appears to be transparent about its corporate structure, and there is no indication that a controlling parent entity and its financials are being improperly withheld. The provided audited financials are for the franchisor entity, PGFC LLC.

Potential Mitigations

• A review of the corporate structure disclosed in Item 1 with your attorney can confirm the relationship between the entities.
• It is good practice to ask the franchisor to explain the role of each affiliate and the parent company.
• Your accountant can confirm that the provided financial statements belong to the correct legal entity granting the franchise.

Explanation

This specific risk was not identified in the FDD. Item 1 discloses a predecessor entity but Items 3 and 4, which cover litigation and bankruptcy, are clean for both the current franchisor and its predecessor. There is no disclosed negative history, such as significant lawsuits or financial failure, associated with the predecessor that would suggest inherited problems for the current system. The history appears straightforward and without major red flags.

Potential Mitigations

• Asking your attorney to confirm that the disclosures for the predecessor in Items 1, 3, and 4 are complete is a good due diligence step.
• If you can find long-term employees or contacts, inquiring about the transition from the predecessor could provide useful context.
• A business advisor can help you perform public record searches on the predecessor entity for any undisclosed issues.

Explanation

This specific risk was not identified in the FDD. Item 3 explicitly states, "No litigation is required to be disclosed in this Item." This indicates that there are no current or past material lawsuits involving the franchisor, its predecessor, or its management that allege fraud, misrepresentation, or violations of franchise law. The absence of such litigation is a positive factor, though it does not guarantee future disputes will not arise.

Potential Mitigations

• Your attorney can perform an independent public records search to verify the absence of significant litigation.
• Asking existing franchisees about their relationship with the franchisor can provide insight into the potential for disputes.
• Maintaining open communication and meticulous documentation of all interactions with the franchisor is a good practice, as advised by your attorney.