Explanation

This risk was not identified in the FDD Package. The business model, which focuses on residential and commercial painting services, operates within a long-established and fundamental service industry. This sector is generally considered to have sustained demand rather than being based on a short-term trend or fad, which is a positive factor for long-term viability.

Potential Mitigations

• A business advisor can help you research the long-term stability and economic outlook for the local painting services market.
• When speaking with the franchisor, it's useful to ask about their strategies for innovation and adapting to changes in customer preferences or technology.
• An accountant can help you model financial projections that account for normal economic cycles within this established industry.

Explanation

This specific risk was not identified. Item 2 indicates that the Managing Member, Richard Gould, has been operating a similar painting business through an affiliate since 1999. This suggests substantial direct experience in the core business being franchised. While the franchisor entity itself is newer (formed in 2018), the leadership possesses a long history in the industry, which is a significant positive factor.

Potential Mitigations

• A business advisor can help you evaluate how the management team's industry experience translates into the support and systems offered to franchisees.
• When interviewing franchisees, specifically ask about the quality of guidance and operational expertise provided by the leadership team.
• In your discussions with the franchisor, inquire how their long-term industry knowledge has shaped the franchise model.

Explanation

This risk was not identified in the FDD Package. Item 1 states that the franchisor has no parent company. The disclosures do not indicate any ownership or control by a private equity firm. Therefore, the specific risks associated with a private equity ownership model, such as a focus on short-term returns over franchisee success, do not appear to be present here.

Potential Mitigations

• It is still prudent to ask your attorney to verify the company's ownership structure to confirm the absence of undisclosed controlling entities.
• A business advisor can help you research the backgrounds of the principal owners identified in Item 2 to understand their long-term vision.
• Always consider the long-term goals of any business owner, which can be discussed with existing franchisees.

Explanation

This risk was not identified in the FDD package. Item 1 explicitly states that the franchisor has no parent company. Therefore, concerns related to the non-disclosure of a parent entity's financial status or influence are not applicable in this case.

Potential Mitigations

• Your attorney should still confirm the corporate structure and ensure there are no undisclosed affiliates that could impact your business.
• When assessing franchisor stability, your accountant's analysis should focus solely on the financial statements of RPG Franchising, LLC itself.
• Always ask the franchisor to confirm there are no other entities whose financial health is critical to their ability to support you.

Explanation

This risk was not identified in the FDD package. The disclosure in Item 1 states that the franchisor does not have any predecessors. As such, there are no concerns related to an undisclosed or negative history from a prior entity that operated the franchise system.

Potential Mitigations

• While there is no disclosed predecessor, asking the franchisor about the history of their affiliate company can provide useful context.
• Your attorney can perform public record searches to confirm the information disclosed in Item 1 about the franchisor's history.
• A business advisor can help you focus your due diligence on the track record of the current franchisor and its management team.

Explanation

While Item 3 discloses a regulatory consent order with Washington state for an unregistered sale, it does not reveal a pattern of franchisee-initiated lawsuits alleging fraud or misrepresentation. The absence of multiple such lawsuits is a positive factor. However, the existing regulatory action, while singular, should still be reviewed carefully, as it points to a past compliance failure.

Potential Mitigations

• Your attorney should carefully review the details of the consent order in Item 3 to understand its implications for the franchisor's compliance practices.
• It is wise to ask the franchisor what changes they have made to their legal and compliance procedures since this event occurred.
• Checking with the state franchise administrators listed in Exhibit A for any other complaints can be a valuable due diligence step.