Explanation

The FDD does not indicate a risk of excessively rapid growth. Item 20 tables show a slow and steady increase in the number of total outlets over the past three years. This pace of growth does not suggest that the franchisor's support systems are likely to be overstretched. This type of risk matters because uncontrolled growth can dilute brand quality and franchisee support.

Potential Mitigations

• A business advisor can still help you assess if the franchisor's current infrastructure is adequate for its planned future growth.
• It remains a good practice to ask current franchisees about the quality and timeliness of the support they receive from the franchisor.

Explanation

This risk was not identified. The business model, centered on calzones, salads, and desserts, is based on a well-established fast-casual restaurant format. This concept does not appear to be tied to a short-term trend or fad, suggesting a more stable market demand. This risk is important because businesses based on fads can face declining sales once consumer interest wanes.

Potential Mitigations

• Your business advisor can help you research the long-term consumer demand for this specific type of restaurant in your local market.
• It is still valuable to ask FOTS about their plans for menu innovation and concept evolution to stay relevant.

Explanation

This risk was not identified in the FDD. Item 2 indicates the management team has significant and relevant experience. The founders have operated the underlying restaurant concept since 2012, and the President of Franchise Operations has prior experience with major franchise brands. This suggests a capable leadership team. A lack of management experience can lead to poor support and strategic errors.

Potential Mitigations

• When speaking with current franchisees, it is still a good idea to inquire about their direct experiences with the management team's competence and support.
• A business advisor can help you assess if the management team's skills align with the company's future growth plans.

Explanation

This risk does not appear to be present. Item 1 indicates the franchisor, FOTS, LLC (FOTS), is a Missouri limited liability company and does not disclose any ownership by a private equity firm. This type of risk is significant because PE ownership can sometimes lead to decisions that prioritize short-term investor returns over the long-term health of franchisees and the brand.

Potential Mitigations

• It is always wise to ask FOTS about any potential plans for a future sale of the company.
• Your attorney should review the assignment clauses in the Franchise Agreement to understand your rights if the system is sold in the future.

Explanation

This risk was not identified. Item 1 clearly discloses the relationship between the franchisor, FOTS, LLC (FOTS), and its key affiliate, MM&P Concepts, LLC, which owns the intellectual property. The structure appears transparent, and there is no indication of an undisclosed parent company whose financial condition would be material to your investment decision.

Potential Mitigations

• Your attorney should review the licensing agreement between FOTS and its affiliate to understand the stability of the franchisor's rights to the system.
• An accountant can help assess the financial health of the disclosed franchisor entity, FOTS, which is the party you will be contracting with.

Explanation

This risk was not identified, as Item 1 of the FDD explicitly states that the franchisor has no predecessors. This means the company's disclosed history in Items 3, 4, and 21 represents the full history of the business under this management. This is important, as a lack of predecessor history avoids the risk of hidden past failures or litigation associated with a prior owner.

Potential Mitigations

• A business advisor can help you verify the company's history through public record searches to confirm the information in the FDD.
• Speaking with the longest-tenured franchisees can provide additional confirmation of the system's history.

Explanation

This risk is not present. Item 3 of the FDD states that there is no litigation that requires disclosure. This is a positive sign, as a pattern of lawsuits, especially those initiated by franchisees alleging fraud or misrepresentation, can be a major red flag about the health and integrity of a franchise system.

Potential Mitigations

• Your attorney can still conduct independent public record searches to verify the absence of material litigation.
• It is always a good practice to ask current and former franchisees if they are aware of any disputes, even those not rising to the level of reportable litigation.