Explanation

Because Seva LLC is a new franchisor that only began offering franchises in March 2025, it has no franchised outlets. Therefore, the Item 20 tables show no franchisee turnover, terminations, or closures. While this means there is no negative historical data, it also means there is no track record to evaluate system health or franchisee satisfaction. The risk of future turnover in an unproven system is a key consideration not reflected in the current data.

Potential Mitigations

• Your business advisor should help you understand the heightened risks associated with being one of the first franchisees in a new system.
• It is important to discuss the franchisor's support systems and plans for ensuring franchisee success with their management team.
• An attorney can help you understand the contractual obligations you will have even if the business is not successful.

Explanation

This risk was not identified in the FDD package. The franchisor is a new system with no franchised outlets, so there is no history of rapid growth. Uncontrolled growth can strain a franchisor's ability to provide adequate support, training, and quality control, potentially harming all franchisees in the system. Careful monitoring of projected growth versus support infrastructure is crucial for any franchise.

Potential Mitigations

• A business advisor can help you question the franchisor about their controlled growth strategy and plans for scaling support services.
• Discussing the franchisor's long-term vision with their leadership team can provide insight into their strategic planning.
• Your accountant can assess if the franchisor's financial model supports sustainable growth rather than just rapid expansion.

Explanation

This risk was not identified. Senior home care is a well-established and growing service industry driven by demographic trends, not a short-term fad. A fad business relies on novelty and can see consumer demand evaporate quickly, leaving franchisees with a worthless investment and ongoing liabilities. The long-term demand for non-medical senior care appears to be stable and growing, mitigating this particular risk.

Potential Mitigations

• Your business advisor can help you research long-term industry trends to confirm the sustained demand for the services you will offer.
• It is still wise to ask the franchisor about their plans for innovation and adaptation to evolving market needs.
• An accountant can help you evaluate the business model's resilience to economic shifts and competitive pressures.

Explanation

This risk was not identified in the FDD package. There is no disclosure in Item 1 or elsewhere to suggest the franchisor is owned by a private equity firm. Such ownership can sometimes lead to a focus on short-term profits and a quick exit strategy, potentially at the expense of long-term brand health and franchisee support. Prospective franchisees should always understand the ownership structure of the franchisor.

Potential Mitigations

• Your attorney can help you verify the ownership structure of the franchisor through public records.
• A business advisor can help you understand the potential impacts of different ownership structures on a franchise system.
• Inquiring about the long-term goals of the ownership team can provide valuable insight.

Explanation

This risk was not identified in the FDD. Item 1 does not disclose a parent company. When a franchisor is a subsidiary of a larger parent, the financial health and strategic direction of that parent can significantly impact the franchise system. Proper disclosure, including parent company financial statements when required, is crucial for a franchisee to accurately assess the overall stability and backing of their potential investment.

Potential Mitigations

• Your attorney can confirm the franchisor's corporate structure and identify any undisclosed parent companies.
• An accountant can advise if parent company financials should have been included based on FTC rules.
• A business advisor can help you research the reputation and stability of any affiliated companies.

Explanation

This risk was not identified in the FDD. Item 1 does not list any predecessors for Seva LLC. A predecessor is a company from which the franchisor acquired the main assets of the business. Full disclosure of a predecessor's history, including any past litigation or bankruptcy, is important because it can reveal inherited problems or provide a longer-term view of the system's historical health and challenges.

Potential Mitigations

• Your attorney should always verify the franchisor's statements about predecessors in Item 1.
• A business advisor can assist in researching the history of the brand and its founders if there are any concerns.
• Asking long-term franchisees, if any exist, about the system's history can sometimes uncover relevant information.

Explanation

This risk was not identified in the FDD. Item 3 states that no litigation is required to be disclosed. A pattern of lawsuits, especially those initiated by franchisees alleging fraud or misrepresentation, can be a major red flag indicating systemic problems. Similarly, a high number of suits filed by the franchisor against franchisees could suggest an overly aggressive or unsupportive culture. The absence of disclosed litigation is a positive indicator.

Potential Mitigations

• Your attorney can conduct independent public records searches to verify that no material litigation has been omitted.
• It is good practice to ask current and former franchisees about their experiences with disputes within the system.
• Understanding the dispute resolution process outlined in the Franchise Agreement with your attorney remains important.