Explanation

This risk was not identified. The FDD includes audited financial statements for InFrasys, Inc. (InFrasys), the franchisor. A review of these statements for fiscal year 2024 indicates strong financial health, with significant net income and positive stockholder's equity. Financial instability, which can affect a franchisor's ability to support its franchisees, does not appear to be a current concern based on the provided documents.

Potential Mitigations

• It is always prudent to have your accountant review the franchisor's complete financial statements, including all footnotes, to independently assess their financial health.
• Discussing the franchisor's financial performance and capitalization with your financial advisor can help you understand their capacity to support the system long-term.
• Your attorney should confirm that the financial statements provided are audited and otherwise comply with all federal and state franchise disclosure requirements.

Explanation

This risk was not identified. FDD Item 20 data indicates the franchise system has been stable, not experiencing rapid growth over the last three years. The number of franchised outlets has remained consistent. While rapid growth can strain a franchisor's support systems, this does not appear to be a current risk for this mature franchise system.

Potential Mitigations

• A business advisor can help you evaluate the pros and cons of joining a mature, slow-growth system versus a rapidly expanding one.
• When speaking with current franchisees, it is useful to ask about the quality and consistency of the franchisor's support over time.
• Your attorney can review the franchisor's obligations in Item 11 to ensure support commitments are clearly defined.

Explanation

This risk was not identified. The franchisor, InFrasys, has been offering franchises since 1993, as disclosed in Item 1. FDD Item 20 further indicates that franchised businesses have been in operation for many years. This suggests you would be joining a mature and established system with a long operational track record, not a new or unproven one.

Potential Mitigations

• Engage a business advisor to analyze the competitive landscape for a mature brand versus newer market entrants.
• It is still valuable to have your accountant review the long-term financial trends of the franchisor, even for an established system.
• Discussing the brand's evolution and future plans with long-tenured franchisees can provide valuable insight into the system's health.

Explanation

This risk does not appear to be present. The franchise operates in the pavement maintenance industry, an established and necessary service tied to infrastructure upkeep rather than a fleeting consumer trend. The franchisor's long history, with business lineage dating back to 1969, indicates a business model with sustained, long-term demand.

Potential Mitigations

• A business advisor can help you research the demand and competition for pavement maintenance services in your specific local market.
• Even for an established industry, consulting with your accountant on the business's seasonality and economic sensitivity is important.
• Your attorney should review the scope of services you are permitted to offer to ensure you can adapt to local needs.

Explanation

This risk was not identified. FDD Item 2 details the business experience of the management team. The key executives, including the President, have decades of experience in both the pavement maintenance industry and with the SealMaster franchise system specifically. The management team appears to be stable and deeply experienced.

Potential Mitigations

• It is still beneficial to engage a business advisor to help you formulate questions for the management team about their strategic vision for the future.
• When speaking to franchisees, inquire about their direct interactions with and the effectiveness of the leadership team.
• An attorney can help verify if the experience disclosed aligns with the support obligations promised in the Franchise Agreement.

Explanation

This risk was not identified. Item 1 of the FDD clearly identifies InFrasys as the franchisor and discloses its key affiliate, ThorWorks Industries, Inc. There is no indication of an undisclosed parent company whose financials or history would be material to your decision. The franchisor appears to be providing its own direct, audited financial statements as required.

Potential Mitigations

• An attorney can help you understand the legal relationship and obligations between the franchisor and its disclosed affiliates.
• Your accountant should review any disclosed transactions between the franchisor and its affiliates for fairness and potential conflicts of interest.
• Asking the franchisor to provide a corporate organizational chart can offer additional clarity on the company structure.

Explanation

This does not appear to be a risk. FDD Item 1 indicates the franchisor has operated the system since 1993. While an affiliate has a predecessor, the franchise system itself does not appear to have a complex or problematic predecessor history that would introduce hidden risks from a prior operator of the franchise system.

Potential Mitigations

• It is always good practice for your attorney to review the complete corporate history disclosed in Item 1.
• In discussions with long-tenured franchisees, you could inquire about the early history of the system for additional context.
• A business advisor can help research the brand's reputation over its entire history to ensure no issues are missed.