Explanation

The franchisor, MIF, L.L.C. (MIF), appears to be financially stable based on a review of its audited financial statements. The company shows consistent profitability and a strong balance sheet, primarily consisting of inter-company receivables from its parent, Marriott International, Inc. The auditor's report is unqualified and contains no warnings. Therefore, a risk of franchisor financial instability was not identified; MIF appears capable of supporting its obligations.

Potential Mitigations

• An accountant should review the franchisor's financial statements, including all footnotes, to form an independent opinion on its financial health.
• It is wise to discuss the relationship between the franchisor and its parent company with your financial advisor to understand how it impacts overall stability.
• Legal counsel can help you understand any financial performance covenants or the lack thereof in the franchise agreement.

Explanation

As 'Series by Marriott' is a new franchise system that began offering franchises in April 2025, there were no operating franchised outlets in the three years covered by the FDD's tables. Consequently, there is no historical data on franchisee turnover, terminations, or closures. While this specific risk is not present in the data, the lack of an operating history is itself a significant consideration, as there is no track record of franchisee success or failure.

Potential Mitigations

• A business advisor can help you evaluate the risks of investing in a new system with no operating history.
• It is important to ask your attorney to scrutinize the termination and renewal clauses in the franchise agreement, as there's no precedent for their application.
• Speaking with the first group of franchisees as they open will be critical to understanding the system's viability; your business advisor can help prepare questions.

Explanation

This is a new franchise system with no operating outlets as of the FDD's issuance date. While Item 20 projects five new outlets in the next fiscal year, there is no history of past growth. Therefore, a risk of unsustainable rapid growth straining franchisor resources is not currently demonstrated by the data. However, as a new system, any future growth will be rapid relative to its starting base of zero, which is a core risk of this offering.

Potential Mitigations

• A business advisor can help you assess the franchisor's plans and capacity for providing franchisee support as the system grows.
• Engaging with the first franchisees to open will provide insight into the quality and timeliness of the franchisor's support during its initial growth phase.
• Your accountant should review the franchisor's financials to determine if it has the capital to adequately support its projected expansion.

Explanation

This risk was not identified. The franchisor, MIF, L.L.C., is a subsidiary of Marriott International, Inc. (MII) and relies on MII's management. The executive team detailed in Item 2 has extensive, long-term experience in the hotel and franchising industries. A lack of management experience does not appear to be a risk for this franchise.

Potential Mitigations

• When evaluating any franchise, it is crucial to have a business advisor help you assess the depth and relevance of the management team's experience.
• An attorney can review the franchisor's contractual obligations to provide support and determine if they are backed by an experienced team.
• Checking the professional backgrounds of key executives listed in Item 2 is a recommended step in your due diligence process.

Explanation

This risk was not identified. The franchisor's parent company, Marriott International, Inc., is a publicly-traded corporation, not a private equity firm. Therefore, the specific risks associated with a private equity ownership model, such as a focus on short-term returns or a quick resale of the franchise system, are not present.

Potential Mitigations

• It is always prudent to have your attorney investigate the ownership structure of the franchisor, as disclosed in Item 1.
• A business advisor can help you understand the potential strategic differences between publicly-traded, family-owned, and private equity-owned franchisors.
• Your attorney should review the assignment clause in the Franchise Agreement to understand how easily the franchisor can sell the system, regardless of ownership type.

Explanation

This risk was not identified. The FDD clearly discloses in Item 1 that MIF, L.L.C. is a subsidiary of Marriott International, Inc. While the parent's financials are not provided, the franchisor's own audited financial statements are included in Exhibit J. Given that MIF, L.L.C.'s financials are strong and its relationship with the parent is disclosed, there does not appear to be a failure to disclose a material parent company.

Potential Mitigations

• An accountant should review the franchisor's financial statements and the notes on related-party transactions to understand the financial relationship with its parent.
• An attorney can help determine if the parent company has guaranteed the franchisor's obligations.
• A business advisor can help you research the parent company's public filings for a more complete picture of the overall enterprise's health.

Explanation

This risk was not identified in the disclosure document. Item 1, which details the history of the franchisor, does not list any predecessor entities from which MIF, L.L.C. acquired the 'Series by Marriott' system. The FDD presents this as a new system developed within the Marriott portfolio, so there is no predecessor history to evaluate for potential inherited issues.

Potential Mitigations

• An attorney should always carefully review Item 1 of any FDD to identify predecessors and understand the full history of the franchise system.
• If a predecessor is listed, a business advisor can help you research its history for any signs of trouble.
• When predecessors exist, it's important to ask current long-term franchisees about their experience under the prior ownership.