Explanation

This risk was not identified. The audited financial statements for the franchisor, MIF, L.L.C. (MIF), show it is profitable with a strong balance sheet and significant member's equity. A franchisor's financial health is critical, as it indicates their ability to support the system, invest in the brand, and fulfill their obligations to you. Weak financials could signal instability and risk to your investment.

Potential Mitigations

• An experienced franchise accountant should review the franchisor's financial statements, including footnotes and trends, to provide an independent assessment of their stability.
• Discussing the franchisor's financial health and capitalization with your business advisor can provide crucial context for your investment decision.
• Ask your attorney to confirm if any financial performance triggers in the franchise agreement could impact your obligations.

Explanation

This risk was not identified. Item 20 data from 2022 through 2024 indicates very low franchisee turnover, with only one termination and no non-renewals or franchisor reacquisitions reported across a system of 60-69 franchised outlets. High turnover can be a major red flag, potentially indicating systemic issues such as franchisee unprofitability, dissatisfaction, or a flawed business model. The stability shown here is a positive indicator.

Potential Mitigations

• Discussing the low turnover rates with current franchisees can confirm system health and satisfaction levels; your business advisor can help facilitate these conversations.
• Inquire with the franchisor about the circumstances surrounding the single termination noted in 2024 to gain a complete picture.
• An accountant can help you compare these turnover rates against broader hospitality industry benchmarks for additional context.

Explanation

This risk was not identified. Item 20 data shows steady and controlled growth, with between two and four new franchised outlets opening each year from 2022 to 2024. While any growth requires investment in support, this rate does not suggest an explosive expansion that might outpace the franchisor's ability to provide adequate training and operational assistance. Rapid, unsupported growth can dilute brand quality and franchisee support.

Potential Mitigations

• Speaking with franchisees who have opened recently can provide insight into the quality and timeliness of the support they received from the franchisor.
• A review of the franchisor's financials with your accountant can help assess their capacity to support continued, steady growth.
• Your business advisor can help you evaluate the franchisor's infrastructure for supporting new and existing locations.

Explanation

This risk was not identified. The franchisor is a subsidiary of Marriott International, Inc., a global hospitality company with decades of experience operating and franchising hotels. The Renaissance brand itself has been part of the Marriott system since 1997. An unproven system or inexperienced management team can pose significant risks, including the lack of tested operating procedures, brand recognition, and adequate franchisee support.

Potential Mitigations

• It is still prudent to have your business advisor research the specific track record and franchisee sentiment for the Renaissance brand within the larger Marriott portfolio.
• Engage with the franchisee association (MINA) mentioned in Item 20 to gather insights from other operators within the system.
• Your attorney should verify that the obligations outlined in the FDD are from the correct Marriott corporate entity.

Explanation

This risk was not identified. Renaissance Hotels is a long-established, upscale hotel brand and is not based on a new or fleeting trend. A 'fad' business carries the risk that consumer interest could decline sharply, potentially leaving you with a long-term contractual obligation for a business with diminished market demand. This brand's established presence in the full-service hotel sector suggests a more stable market position.

Potential Mitigations

• A business advisor can help you conduct an independent analysis of the long-term competitive landscape for upscale hotels in your specific market.
• Discussing the brand's strategies for innovation and staying relevant with the franchisor can provide insight into its long-term vision.
• Your financial advisor can help model the business's resilience to various economic cycles.

Explanation

This risk was not identified. FDD Item 2 lists the directors and principal officers of the parent company, Marriott International, Inc. The individuals listed possess extensive and long-standing careers in the hospitality industry, franchising, and executive management. Inexperienced leadership can be a significant risk, as it may lead to poor strategic decisions, inadequate franchisee support, and a lack of established operational systems.

Potential Mitigations

• A business advisor can still help you research the public reputation and recent performance of the key executives responsible for the Renaissance brand.
• Speaking with current franchisees about their perception of the leadership team's competence and support is a valuable due diligence step.
• Your attorney can help you understand the management structure and identify the key individuals you will interact with.

Explanation

This risk was not identified. The franchisor's parent company, Marriott International, Inc., is a publicly-traded corporation, not a private equity firm. Ownership by a private equity firm can sometimes introduce risks related to short-term profit motives, which may not always align with the long-term health of the franchise system or the individual success of its franchisees.

Potential Mitigations

• It is still wise for your business advisor to review the recent performance and strategic direction of the publicly-traded parent company.
• Your attorney should analyze the 'Assignment' clause in the franchise agreement to understand the conditions under which the brand could be sold.
• An accountant can review the parent company's public financial filings for a comprehensive view of its overall financial strategy.

Explanation

This risk was not identified. The FDD clearly discloses that the franchisor, MIF, L.L.C., is a subsidiary of Marriott International, Inc. It provides audited financial statements for MIF, L.L.C. itself, as required. Failing to disclose a parent company or its financials when required can obscure the true financial backing and stability of the franchisor, which is a key component of a franchisee's risk assessment.

Potential Mitigations

• Your accountant should review the provided financial statements for the franchisor entity to confirm its standalone financial condition.
• It is beneficial for your business advisor to also review the publicly available financials of the parent company, Marriott International, Inc., for a complete picture.
• Your attorney can confirm that all disclosure requirements regarding parent companies and affiliates under franchise law have been met.

Explanation

This risk was not identified. FDD Item 1 discloses the franchisor's history, including the acquisition of the Renaissance brand, but does not indicate any predecessors from which it acquired the franchise system in a way that would require additional disclosure under franchise rules. A lack of information about a system's predecessor can hide a history of litigation, bankruptcy, or franchisee failure, which are important facts for your investment decision.

Potential Mitigations

• Having your attorney review the corporate history in Item 1 is a good practice to ensure all relevant entities have been properly disclosed.
• You can still ask long-tenured franchisees about the brand's history and any significant changes since Marriott's acquisition.
• A business advisor can help you research the public history of the brand for any relevant information predating the current ownership.