Explanation

This risk was not identified in the FDD package. Item 20, which tracks franchisee turnover, is blank because QM Staffing Group is a new franchisor with no operating history. In established systems, high turnover (terminations, non-renewals, or closures) can signal systemic problems. Analyzing this data over three years is a crucial step in evaluating a mature franchise, as it provides insight into franchisee success and satisfaction.

Potential Mitigations

• When evaluating any established franchise, have your accountant calculate the annual turnover rate from Item 20 data.
• Engaging a business advisor to compare a system's turnover rate against industry benchmarks is a vital due diligence step.
• Your attorney can help you formulate questions for former franchisees to understand why they left the system.

Explanation

This risk was not identified, as the FDD's Item 20 tables show QM Staffing Group has no existing franchisees and has not yet started its growth phase. For other franchise systems, very rapid expansion can be a red flag. It may strain the franchisor's resources, leading to a decline in the quality of support, training, and site selection assistance provided to franchisees. This can negatively affect the entire system's health and brand reputation.

Potential Mitigations

• When reviewing other FDDs, it is important to have your accountant analyze the franchisor's financials in Item 21 to see if they can support the growth shown in Item 20.
• Consulting with a business advisor can help determine if a franchisor's support infrastructure is keeping pace with its unit growth.
• Asking a wide range of existing franchisees about the quality and timeliness of support is a key due diligence step.

Explanation

This specific risk was not identified. The franchise operates in the medical staffing industry, which is an established sector with consistent demand, not a business model based on a short-term fad or trend. The long-term viability of the underlying industry appears stable. The primary risks for this franchise stem from its execution and support as a new system, rather than from the transient nature of its core business concept.

Potential Mitigations

• For any franchise concept, a business advisor can help you conduct independent market research to assess the long-term consumer demand for its products or services.
• It is wise to evaluate a franchisor's plans for innovation and adaptation to stay relevant in a changing market.
• Your financial advisor can help you consider a business model's resilience to economic shifts and its sustainability beyond current trends.

Explanation

This risk was not identified in the FDD package. Item 1, which describes the franchisor and its corporate structure, gives no indication that QM Staffing Group is owned or controlled by a private equity firm. The company appears to be privately held by its founders. Therefore, risks often associated with private equity ownership, such as a focus on short-term returns over long-term system health, do not appear to be present here.

Potential Mitigations

• When analyzing any franchise, your attorney can help you research the ownership structure to identify any private equity involvement.
• If a franchisor is owned by a private equity firm, a business advisor can help you research the firm's track record with its other portfolio companies.
• It is always prudent to ask current franchisees about any changes in support or culture following an acquisition.

Explanation

This risk was not identified in the FDD package. Item 1 does not disclose any parent companies. QM Staffing Group is presented as the primary corporate entity. While affiliates are disclosed, there is no indication of a controlling parent company whose financials or history would be material to your investment decision. The franchisor entity appears to be a standalone, new corporation.

Potential Mitigations

• For any FDD, your attorney should verify the corporate structure, especially if the franchisor is a newly formed or thinly capitalized subsidiary.
• If a parent company exists and guarantees the franchisor's performance, it is vital to have your accountant review the parent's financial statements.
• Understanding the relationship between a franchisor and its parent can be crucial, a task your business advisor can assist with.

Explanation

This risk was not identified in the FDD package. Item 1, which details the franchisor's history, does not list any predecessors. QM Staffing Group is a new entity that has not acquired its operating system from a prior company. Therefore, there are no hidden risks associated with a predecessor's potential history of litigation, bankruptcy, or franchisee failure.

Potential Mitigations

• When evaluating a franchise that does have a predecessor, it's critical to have your attorney review the predecessor's litigation and bankruptcy history in Items 3 and 4.
• A business advisor can help you research a predecessor's public reputation and track record.
• Speaking with long-term franchisees who operated under a predecessor can provide invaluable historical context.

Explanation

This risk was not identified in the FDD package. Item 3 states, "No litigation is required to be disclosed in this Item." As a new company that has not yet sold any franchises, it is expected that there is no history of litigation with franchisees. The absence of litigation is a positive sign, but it is due to the company's lack of operating history rather than a proven track record of positive franchisee relations.

Potential Mitigations

• When reviewing an FDD for an established system, a thorough analysis of Item 3 with your attorney is essential to identify any patterns of disputes.
• It's advisable to have your attorney research the context of any disclosed litigation beyond what is summarized in the FDD.
• For any system, asking current franchisees about their experiences with dispute resolution can provide valuable insights.