Explanation

This risk was not identified. The FDD’s Item 20 data shows very low franchisee turnover, with only one termination and two franchisor reacquisitions over the last three years across a rapidly growing system. Low turnover can be a positive indicator of franchisee satisfaction and system health. However, you should still verify this by speaking with current and former franchisees, as numbers alone may not tell the whole story, especially in a system that is expanding quickly.

Potential Mitigations

• A business advisor can help you calculate the actual turnover rate from the Item 20 data and compare it to industry averages for context.
• To gain qualitative insight behind the numbers, it is essential to contact a diverse range of current and former franchisees from the list provided in Exhibit G.
• During discussions with franchisees, ask about their satisfaction with the system, profitability, and the reasons they are aware of for any departures, with guidance from your attorney.

Explanation

This risk was not identified. Item 1 and Item 20 indicate that the Take 5 Oil Change system and its predecessors have been in operation for many years, with a significant number of both affiliate-owned and franchised outlets. Furthermore, Item 2 describes a management team with extensive experience in the automotive and franchise industries. An established system with experienced leadership can reduce risks associated with unproven business models or inadequate support infrastructure.

Potential Mitigations

• Even with an established system, it is wise to have a franchise attorney review the FDD for any recent significant changes in ownership or management that could alter the system’s direction.
• A business advisor can help you evaluate if the franchisor's long history is a good indicator of future success and stability.
• Discuss the management team's reputation and the system's track record with a representative sample of current franchisees.

Explanation

This risk does not appear to be present. The business model, which focuses on quick-service oil changes and related automotive maintenance, serves a widespread and long-standing consumer need. This type of business is well-established in the marketplace and is not dependent on a short-term trend or fad, suggesting a more stable market demand over the long term.

Potential Mitigations

• It is still prudent to conduct your own market research with a business advisor to confirm the long-term demand for these specific services in your local area.
• Investigating how the business model has adapted to industry changes, such as the rise of electric vehicles, can provide insight into its future viability.
• Your financial advisor can help you assess the model's resilience to various economic cycles.

Explanation

This risk was not identified. Item 2 of the FDD lists the franchisor's key management personnel and describes their professional backgrounds. The executives generally appear to have considerable experience in the automotive service industry and in managing large-scale franchise systems. Experienced leadership can be a positive factor, as it may lead to better-developed systems, more effective support, and stronger strategic guidance for franchisees.

Potential Mitigations

• Your business advisor can help you further research the professional reputations and track records of the key executives listed in Item 2.
• When speaking with current franchisees, inquire about their direct experiences with the management team's competence, accessibility, and strategic vision.
• A franchise attorney can help you understand the roles and responsibilities of the executive team as outlined in the FDD.

Explanation

This risk was not identified. The FDD clearly discloses the parent and guarantor structure. The franchisor, Take 5 SPV, is a direct subsidiary of Driven Systems LLC, which in turn is part of the larger Driven Brands, Inc. corporate family. The FDD provides the audited financial statements for the guarantor, Driven Systems LLC, and also for the ultimate parent, Driven Brands, Inc., in Exhibit E, along with a formal Guarantee of Performance in Exhibit F.

Potential Mitigations

• It is crucial for your accountant to carefully review the financial statements of both the guarantor and the ultimate parent company to assess the overall financial strength backing your franchise.
• Your attorney should analyze the terms of the Guarantee of Performance to ensure it provides meaningful and enforceable protection.
• Clarifying the specific roles and obligations of the parent, guarantor, and franchisor entities with your business advisor can help you understand the corporate structure.

Explanation

This risk does not appear to be present. Item 1 discloses the franchisor's history and predecessors, noting that Take 5 Franchising LLC previously offered franchises. The document appears to trace the lineage of the brand through various corporate transactions, including the Secured Financing Transaction in 2018 that established the current franchisor entity. The FDD provides historical data and context, which is important for understanding the system's evolution.

Potential Mitigations

• Your attorney can help you trace the history of the company and its predecessors as outlined in Item 1 to ensure a clear understanding of the brand's past.
• When speaking with long-term franchisees, asking about their experiences under any previous ownership structures can provide valuable historical context.
• A business advisor can help you assess if any past issues with predecessors seem to have been resolved by the current management.