Explanation

This risk was not identified. The audited financial statements for Ram Jack Systems Distribution, LLC (Ram Jack LLC) show profitability and a positive net worth. A prospective franchisee should still have their accountant review the statements to understand the franchisor's financial condition, including the high volume of related-party transactions, and assess its ability to support the system long-term.

Potential Mitigations

• A thorough review of the franchisor's financial statements with your accountant is critical to independently assess their stability and capital structure.
• Ask your business advisor to evaluate the franchisor's financial performance in the context of its industry and growth plans.
• Seeking counsel from an attorney is advisable to understand any financial risks disclosed in the footnotes or state-specific addenda.

Explanation

This risk was not identified in the FDD package. The franchise system has seen a net decline in total outlets over the past three years rather than rapid growth. While stability is generally positive, it is still important for a prospective franchisee to understand the franchisor's future growth strategy and its capacity to support any new development.

Potential Mitigations

• Your business advisor can help you analyze the system's growth trajectory outlined in Item 20.
• Engaging an attorney to discuss the franchisor's development plans can provide clarity on future market saturation.
• An accountant should review the franchisor's financials to assess if they have the resources to support any planned future growth.

Explanation

This risk was not identified. FDD Item 1 indicates the franchise system has been operating since 1999 and the business concept has existed for much longer. The franchisor has significant experience in the foundation repair industry. This history suggests a mature system, but a franchisee should still assess its modern-day relevance and competitiveness.

Potential Mitigations

• Discuss the franchisor's long-term strategic plans and recent innovations with your business advisor.
• Even with a mature system, an attorney should review all agreements for terms that may be outdated or unfavorable in the current market.
• Your accountant can analyze financial trends over the disclosed three years to ensure the established system maintains its financial health.

Explanation

This risk was not identified. The franchise operates in the foundation repair and support industry, which is a needs-based service sector rather than a discretionary or trend-driven one. Demand for these services is typically tied to property maintenance and structural issues, suggesting long-term market viability.

Potential Mitigations

• A business advisor can help you research the long-term demand and competitive landscape for foundation repair services in your specific market.
• Review the franchisor's history of product and service development in Item 1 with your attorney to gauge adaptability.
• An accountant can help you model the business's potential performance under various economic conditions.

Explanation

This risk was not identified. Item 2 of the FDD shows that the key personnel and management team have extensive experience within the company and the foundation repair industry. The founder remains actively involved, which suggests a stable leadership structure with deep institutional and industry knowledge.

Potential Mitigations

• Your business advisor can help you research the backgrounds of the key executives listed in Item 2.
• When speaking with current franchisees, it is useful to ask about their direct experiences with the management team's competence and support.
• An attorney can advise on any management-related disclosures or lack thereof that might pose a hidden risk.

Explanation

This risk was not identified in the FDD. Item 1 indicates the franchisor is a limited liability company, and the disclosures do not mention ownership by a private equity firm. The business appears to be privately held by its founders and key members. This structure can sometimes indicate a focus on long-term brand health over short-term returns.

Potential Mitigations

• Your attorney should confirm the ownership structure disclosed in Item 1 and investigate any recent changes in control.
• A business advisor can help you understand the implications of the current ownership structure on the company's strategy and culture.
• When interviewing franchisees, ask about their perception of the ownership's long-term commitment to the system.

Explanation

This risk was not identified. Item 1 of the FDD describes the franchisor and its key affiliates. Ram Jack LLC provides its own audited financial statements in Item 21. There is no indication of a parent company whose financials are being withheld or are necessary for a complete financial picture, although the system has extensive affiliate transactions.

Potential Mitigations

• Your accountant should review the audited financial statements and the detailed notes on related-party transactions.
• An attorney can help clarify the legal relationship between the franchisor and its numerous affiliates.
• During franchisee interviews, asking about the practical roles of the various affiliated companies can provide valuable insight.

Explanation

This risk was not identified. The FDD does not mention any predecessors in Item 1. The franchisor, Ram Jack LLC, has been in operation since 1999, and its affiliate GEI has history back to 1975. The disclosed history appears to be that of the current operating entity and its direct affiliates, without suggestion of acquired systems or undisclosed predecessor issues.

Potential Mitigations

• An attorney should confirm the corporate history as disclosed in Item 1 of the FDD.
• A business advisor can assist in researching the company's brand history and reputation in the marketplace.
• It is always prudent to ask long-term franchisees about the history of the company and any significant past events.

Explanation

This risk was not identified. Item 3 discloses a single lawsuit initiated by the franchisor against a terminated franchisee, which was resolved via settlement. There is no disclosure of a pattern of litigation where franchisees allege fraud or misrepresentation. The disclosed litigation appears to be a standard business dispute rather than a systemic issue, which is a positive sign.

Potential Mitigations

• Your attorney should review the details of the litigation disclosed in Item 3 to confirm its nature and resolution.
• Performing an independent public records search for litigation involving the franchisor can be a valuable step, which your attorney can assist with.
• Asking current franchisees about their awareness of disputes within the system can provide additional context.