Explanation

This risk was not identified. The business model, focused on beauty and hair removal services, operates in a well-established and durable industry rather than one based on a short-term trend. While consumer preferences can shift, the core services offered are not typically considered a fad. However, long-term success still depends on market demand and competitive positioning.

Potential Mitigations

• A business advisor can help you conduct independent market research to confirm sustained local demand for these specific beauty services.
• Discuss the franchisor’s strategies for innovation and adapting to evolving beauty trends with existing franchisees.
• It is wise to have your accountant help you develop financial projections that account for local competition and market dynamics.

Explanation

This risk was not identified in the FDD. Item 2 indicates that the key personnel of Nartov Ventures, particularly the CEO and Managing Partner, have been involved with the Sugaring NYC concept and its affiliates since 2015, predating the franchisor's formation in 2017. This suggests they have direct operational experience in the specific business being franchised, which is a positive factor. However, managing a franchise system is different from running a corporate-owned store.

Potential Mitigations

• In discussions with current franchisees, it is a good idea to inquire about their perception of the management team's expertise and effectiveness.
• Your business advisor can help you evaluate the depth and breadth of the entire management team's background.
• Your attorney can help you confirm the roles and responsibilities of the key executives as described in Item 2.

Explanation

This risk was not identified. Item 1 of the FDD does not indicate that Nartov Ventures is owned or controlled by a private equity firm. It appears to be a privately held limited liability company. 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 system, do not appear to be present based on the disclosure.

Potential Mitigations

• Your attorney can verify the ownership structure of the franchisor through public records to confirm the information in Item 1.
• It is always a good practice to ask the franchisor about any potential plans for sale or bringing in outside investors.
• Engage a business advisor to research the backgrounds of the principal owners to understand their business philosophy.

Explanation

This risk was not identified. Item 1 of the FDD states that Nartov Ventures does not have a parent company. It discloses several affiliated companies, including a key supplier, and presents their roles clearly. Since no parent company exists, the issue of needing to disclose parent financials is not applicable. The risks associated with the affiliate supplier are covered elsewhere.

Potential Mitigations

• Your attorney can confirm the corporate structure and the absence of a parent company through a review of public records.
• An accountant should still review the financial statements of the franchisor itself to assess its standalone financial health.
• It is prudent to discuss the roles and influence of the various affiliated companies with your business advisor.

Explanation

This risk was not identified. Item 1 of the FDD states that Nartov Ventures does not have any predecessors from which it acquired the business concept. The franchisor entity was formed in 2017 and began franchising shortly thereafter, building upon the operations of its affiliates. Therefore, there are no predecessor histories of litigation, bankruptcy, or franchisee turnover to conceal.

Potential Mitigations

• Your attorney can help confirm the franchisor’s corporate history as disclosed in Item 1.
• Speaking with the earliest franchisees in the system can provide insight into the franchisor’s initial operations and any early challenges.
• A business advisor can help you assess the risks associated with a relatively new franchisor, even without a predecessor.

Explanation

This risk was not identified. Item 3 discloses one pending small claims case from a franchisee and one concluded trademark dispute with a third party. This does not represent a pattern of litigation, particularly not a pattern of franchisees alleging fraud, misrepresentation, or other systemic issues. A low volume of litigation for a system of this size is not a significant red flag at this time.

Potential Mitigations

• Your attorney should review the details of the disclosed litigation to understand the specific allegations and potential implications.
• It may be beneficial to ask the franchisor for an update on the status of the pending small claims case.
• During due diligence calls, you could ask current franchisees if they are aware of any widespread disputes with the franchisor.