Explanation

The financial statements for the parent company, RiseMark Holdings, LLC, which guarantees the performance of Right at Home, LLC (RAH), were reviewed. They show positive and growing net income and members' equity for the fiscal years 2022, 2023, and 2024. The independent auditor's report is unmodified. No signs of financial instability were identified, which is a positive factor for prospective franchisees who depend on the franchisor's financial health for support and brand development.

Potential Mitigations

• An experienced franchise accountant should still review the complete, audited financial statements and footnotes to confirm this assessment.
• It is advisable to ask your accountant to analyze the franchisor's cash flow and debt levels to ensure long-term stability.
• Discussing the franchisor’s financial strategy and capitalization with your business advisor can provide additional context.

Explanation

This risk was not identified. An analysis of the franchisee turnover data in Item 20 for the 2024 fiscal year reveals a very low attrition rate of approximately 1.8%. This figure, which includes terminations, non-renewals, and other cessations, suggests a stable franchise system with a low rate of franchisees leaving the system. This stability can be a positive indicator for a prospective franchisee, suggesting that existing franchisees are generally continuing their operations.

Potential Mitigations

• Engaging a business advisor to compare the system's turnover rate with industry averages can provide valuable context.
• You should still contact a sample of current and former franchisees from the lists in Item 20 to discuss their experiences.
• A discussion with your franchise attorney about the definitions used in the Item 20 tables is prudent to ensure a full understanding.

Explanation

This specific risk was not identified as a major concern. The FDD shows steady but not explosive growth in the number of franchised units over the last three years. The franchisor's financial statements appear strong and capable of supporting the current growth rate. A very high rate of expansion can sometimes strain a franchisor's ability to provide adequate support to all franchisees, but the growth rate here appears to be managed.

Potential Mitigations

• It is still wise to ask current franchisees about the quality and timeliness of the support they receive from the franchisor.
• A review of the franchisor's investment in support infrastructure with your business advisor can help assess their ability to manage future growth.
• Your accountant can further analyze the financial statements to confirm that resources allocated to support functions are growing in line with the system.

Explanation

This risk was not identified. Right at Home, LLC (RAH) has been offering franchises since May 2000, as disclosed in Item 1. This indicates a long operational history and a well-established system, which is generally a positive factor. An unproven system would present higher risks related to the viability of the business model, brand recognition, and the adequacy of franchisee support, but that does not appear to be the case here.

Potential Mitigations

• Verifying the system's long-term track record by speaking with long-tenured franchisees is still a recommended due diligence step.
• Engaging a business advisor to research the brand's reputation and history in the marketplace can provide additional assurance.
• Your attorney should confirm that the disclosures regarding the franchisor's history in Item 1 are complete and consistent with other information.

Explanation

This risk is not present. The in-home senior care industry is supported by strong, long-term demographic trends in an aging population, rather than a short-lived fad. The demand for these services is generally considered sustainable. A business based on a fad carries the risk that consumer interest could decline, jeopardizing the long-term viability of your investment even if your contractual obligations remain.

Potential Mitigations

• Your business advisor can help you research the long-term projections and competitive landscape for the senior care industry in your specific market.
• Discuss the franchisor's strategies for innovation and adaptation to evolving healthcare trends with their management team.
• An accountant can help you model the financial resilience of the business under various economic scenarios.

Explanation

This risk was not identified. Item 2 of the FDD details the business experience of the franchisor's key management personnel. The executive team, including the CEO and CFO, demonstrates significant and long-term experience either within the Right at Home system itself or in other relevant and established franchise businesses, such as Home Instead. This level of experience is a positive indicator for the quality of system leadership and support.

Potential Mitigations

• It is still beneficial to discuss your perception of the management team's competence and vision with current franchisees.
• A business advisor can help you research the public reputation and track record of the key executives.
• Formulating questions for the franchisor's leadership team about their strategic plans can provide further insight into their capabilities.

Explanation

This risk was not identified. The FDD properly discloses the parent company, RiseMark Holdings, LLC, in Item 1. Furthermore, the parent company's audited consolidated financial statements are provided as required in Exhibit D, along with a Guaranty of Performance. This provides a transparent view of the financial health of the entity ultimately backing the franchisor's obligations. In some cases, a franchisor might not disclose a parent or its financials, obscuring a complete risk assessment.

Potential Mitigations

• Having your accountant review the parent company's financials in conjunction with the franchisor's is a critical step.
• Your attorney should review the Guaranty of Performance to ensure it provides meaningful protection.
• It is good practice to ask your business advisor to help you understand the complete corporate structure and how it might affect your franchise.

Explanation

This risk was not identified. Item 1 of the FDD states that the franchisor does not have a predecessor in the franchising context. The document discloses a prior corporate structure, but not a history of a different company previously operating this franchise system. Undisclosed or problematic predecessor history could hide past system failures, litigation, or high franchisee turnover, but that does not appear to be the case here.

Potential Mitigations

• It is still prudent for your attorney to confirm the corporate history disclosed in Item 1.
• Asking long-tenured franchisees about the history of the system and any major changes in ownership or management is a valuable due diligence step.
• A business advisor can assist in researching the brand's public history to ensure there are no undisclosed predecessor issues.

Explanation

This risk was not identified. Item 3 states that no litigation information is required to be disclosed. This suggests there have been no recent material legal actions involving the franchisor that would meet the criteria for mandatory disclosure, such as franchisee lawsuits alleging fraud, or significant actions initiated by the franchisor against its franchisees. A pattern of such litigation could indicate serious systemic problems, but its absence is a positive sign.

Potential Mitigations

• You should still perform your own public records search for litigation involving the franchisor, as some cases may not meet the FDD's disclosure threshold; your attorney can assist.
• Asking current and former franchisees about any past or present disputes they are aware of is a crucial due diligence step.
• A franchise attorney can help you understand the specific types of litigation that require disclosure under federal and state rules.