Explanation

This risk was not identified in the FDD package. An unproven system typically lacks a track record, has few operating units, and has management with limited experience. Such factors can increase the risk of business model failure and inadequate franchisee support. While this system has been operating since 2005, other risks related to financial stability and management should still be carefully evaluated.

Potential Mitigations

• Your business advisor can help you assess the experience of the management team detailed in Item 2.
• Have your accountant review the financial statements in Item 21 to gauge the franchisor's history and stability.
• It is always prudent to speak with the longest-operating franchisees listed in Item 20 with guidance from your attorney.

Explanation

The business offers residential and commercial window cleaning and a wide range of other home maintenance services. The market for these services is described as well-developed and mature. This suggests a stable demand but also a competitive landscape. There is no clear indication that the business is based on a short-term fad; however, you will face competition from numerous local, regional, and national providers.

Potential Mitigations

• Your business advisor can help you research the local market to assess long-term demand and the competitive environment.
• Discuss the franchisor's strategies for innovation and staying competitive with both the franchisor and existing franchisees.
• Developing a strong local marketing plan with a marketing professional will be key to establishing your presence in a mature market.

Explanation

This specific risk was not identified in the FDD. Item 2 indicates that the key personnel at JJFI have extensive experience, with most having over a decade of experience owning and operating window cleaning businesses similar to the franchise being offered. Lack of relevant management experience can be a significant risk, as it may lead to poor strategic decisions and inadequate support for franchisees.

Potential Mitigations

• It is still beneficial to verify the quality of management by speaking with current franchisees about their experiences with the leadership team.
• Your business advisor can help you formulate questions for the franchisor regarding their strategic vision and operational expertise.
• Having your attorney review the backgrounds of the individuals listed in Item 2 is a prudent step in your due diligence.

Explanation

This risk was not identified in the FDD package. Item 1 does not indicate that the franchisor is owned by a private equity firm. When a franchisor is owned by a private equity firm, there can be a risk that decisions are driven by short-term financial targets rather than the long-term health of the franchise system, potentially affecting franchisee support and costs.

Potential Mitigations

• Your attorney can help you investigate the franchisor's ownership structure to confirm the absence of private equity involvement.
• Asking the franchisor about their long-term goals for the company can provide valuable insight; your business advisor can assist with this.
• Discussing any changes in ownership or company culture with long-term franchisees is a recommended due diligence step.

Explanation

This risk was not identified in the FDD. JJFI does not disclose any predecessors in Item 1. When a franchisor has predecessors, it is important to review their history for any negative information, such as litigation or bankruptcy, as these could indicate underlying problems with the franchise system that may have been carried over to the current franchisor.

Potential Mitigations

• Your attorney can help you confirm the franchisor's corporate history to ensure there are no undisclosed predecessors.
• Independently researching the company's history online can sometimes reveal information about prior business structures, a task your business advisor could assist with.
• Asking long-tenured franchisees about the history of the system can provide additional context.

Explanation

This specific risk was not identified, as Item 3 of the FDD reports no material litigation involving the franchisor, its predecessors, or key personnel. A pattern of litigation, particularly franchisee-initiated lawsuits alleging fraud or misrepresentation, can be a major red flag indicating systemic problems within a franchise.

Potential Mitigations

• It is still prudent to conduct independent online searches for any litigation involving the franchisor that may not have met the threshold for disclosure; your attorney can guide this.
• Ask current and former franchisees about their experiences with disputes and if they are aware of any non-disclosed legal issues.
• Your attorney should review the dispute resolution clauses in the Franchise Agreement to understand how conflicts are handled.