Explanation

This risk was not identified in the FDD package. Item 20 data reflects steady growth and very low reported franchisee turnover, with only one termination and no non-renewals over the last three years. Generally, high turnover can signal systemic problems such as franchisee dissatisfaction or lack of profitability. A prospective franchisee should always investigate the reasons for any significant number of unit cessations or transfers.

Potential Mitigations

• Even with low reported turnover, speaking with former franchisees listed in Item 20 is a valuable due diligence step a business advisor can help facilitate.
• An accountant can help you calculate the precise turnover rates from Item 20 data to compare against any available industry benchmarks.
• Your attorney can help you ask clarifying questions to the franchisor about the circumstances behind any listed terminations or transfers.

Explanation

This risk was not identified in the FDD. Radwick Franchising began franchising in 2013 and has over a decade of experience with more than 20 locations operating. This indicates it is a seasoned system, not a new or unproven one. For new systems, risks are typically higher due to unverified models and support structures, which a prospective franchisee should carefully evaluate with their business advisor.

Potential Mitigations

• Verifying the franchisor's history and the operating history of its company-owned and franchised units is a standard part of due diligence your business advisor can assist with.
• For any system, it is beneficial to have an accountant review the franchisor's financial statements for signs of stability and sustainable growth.
• Consulting with a franchise attorney can help you understand the risks associated with franchise systems of any age.

Explanation

This risk was not identified. The Spitz concept, an upscale fast-casual restaurant focused on Mediterranean-style food, operates in a well-established and durable segment of the restaurant industry. It does not appear to be based on a short-term or novelty trend. A business concept tied to a fad presents a significant risk that customer demand could evaporate, leaving you with a long-term contract for an unpopular business.

Potential Mitigations

• A business advisor can help you conduct independent market research to assess the long-term consumer demand for the product or service in your specific area.
• Evaluating the franchisor's commitment to research, development, and menu innovation is important for assessing long-term viability.
• An accountant can help you model the financial resilience of the business in a variety of market conditions.

Explanation

This risk was not identified in the FDD. The executive team described in Item 2 has significant, long-term experience with the Spitz brand, with key principals having been involved since 2005, and with the franchise system since 2013. Inexperienced management can be a major risk factor, as it may lead to poor strategic decisions and inadequate franchisee support. You should always vet the leadership team's background.

Potential Mitigations

• A business advisor can help you research the backgrounds of the key management team members to verify their experience in the industry and in franchising.
• Asking existing franchisees about their direct experiences with the leadership team provides valuable, real-world insight.
• Your attorney can help you formulate questions for the franchisor about their management structure and support systems.

Explanation

This risk does not appear to be present. Item 1 of the FDD does not indicate that Radwick Franchising is owned or controlled by a private equity firm; the principals appear to be the original founders. PE ownership can sometimes introduce risks related to prioritizing short-term investor returns over the long-term health of the franchise system. A prospective franchisee should always understand the franchisor's ownership structure.

Potential Mitigations

• Your attorney can help you verify the franchisor's ownership structure through corporate records.
• If a franchisor is owned by a private equity firm, a business advisor can help you research the firm’s track record with other franchise brands.
• It is wise to ask existing franchisees if they have noticed any changes in franchisor support or philosophy following an ownership change.

Explanation

This risk was not identified. The FDD appears to properly disclose the franchisor's affiliate, Radwick Enterprises LLC, in Item 1. There is no indication of a controlling parent company whose identity or financial information has been withheld. In cases where a franchisor is a thinly capitalized subsidiary, the failure to disclose and provide financials for a parent company can obscure significant risks.

Potential Mitigations

• Your attorney can help review the corporate structure described in Item 1 to ensure all relevant parent and affiliate entities are disclosed.
• If a parent company guarantee is mentioned in the FDD, an accountant should verify that the parent's financial statements are included as required.
• Discussing the relationship between the franchisor and its affiliates with your business advisor can clarify operational structures.

Explanation

This risk was not identified in the FDD. Item 1 indicates that Radwick Franchising, LLC has no predecessors. A franchisee should be aware that if a franchisor acquired the system from a predecessor, it's important to investigate the predecessor's history for any signs of trouble, such as litigation or high franchisee turnover, as these issues could be inherited by the current franchisor.

Potential Mitigations

• Reviewing Item 1 of the FDD with an attorney is the best way to identify any disclosed predecessors.
• If a predecessor is listed, a business advisor can help you conduct independent research into its business history and reputation.
• Asking long-term franchisees about their experience under any previous ownership can provide valuable context.

Explanation

This risk was not identified. Item 3 of the FDD states that there is no litigation that requires disclosure. A pattern of litigation, especially franchisee-initiated lawsuits alleging fraud or misrepresentation, can be a significant red flag about the franchisor's practices and the health of the system. A prospective franchisee should always review Item 3 carefully with an attorney.

Potential Mitigations

• A thorough review of Item 3 with your franchise attorney is essential to understand any disclosed litigation history.
• Even if no litigation is disclosed, asking current and former franchisees about their experiences and any disputes is a crucial due diligence step.
• Your attorney can perform independent searches for litigation involving the franchisor that may not have met the criteria for FDD disclosure.