Explanation

This risk was not identified. The FDD's Item 20 data does not show a high rate of franchisee turnover. Over the past three years, the number of terminations, non-renewals, and other cessations appears low relative to the system's size. Consistently low turnover can suggest a stable system with potentially satisfied operators. However, it's still crucial to understand the reasons for any departures that did occur.

Potential Mitigations

• Speaking with a range of current and former franchisees is the best way to understand their satisfaction levels and reasons for leaving.
• Your business advisor can help you calculate and benchmark the turnover rates presented in Item 20 against industry averages.
• An attorney can help you formulate insightful questions for the franchisor and franchisees regarding system stability.

Explanation

This risk was not identified. Take 5 Franchisor SPV LLC (Take 5) and its parent, Driven Brands, Inc., are part of a large, mature organization with extensive experience in franchising and the automotive service industry. The system has a long operational history and a substantial number of existing outlets, which suggests a proven business model rather than an unproven one. The management team also appears to have significant relevant experience.

Potential Mitigations

• A business advisor can still help you research the history and reputation of the specific brand and its parent company.
• It is always prudent to have your attorney review the FDD to confirm the franchisor's business experience and history as disclosed.
• Discussing the system's maturity and direction with a number of existing franchisees provides valuable real-world context.

Explanation

This risk was not identified. The quick oil change industry is a mature and established sector of the automotive aftermarket, not a fleeting trend. The business model is based on consistent consumer demand for essential vehicle maintenance. The franchisor operates within a well-understood market, which can reduce the risk associated with a business concept being a short-lived fad that could lose consumer interest.

Potential Mitigations

• Investigating the long-term stability and competitive landscape of the quick-lube industry with a business advisor is a prudent step.
• An accountant can help you analyze the business model's resilience to economic cycles and technological changes in the automotive sector.
• Your attorney can help review any disclosed information about the franchisor's plans for system evolution and adaptation.

Explanation

This risk was not identified. The business experience of the franchisor's key officers and directors, as detailed in Item 2, appears extensive and relevant. Many executives have significant tenure with the parent company, Driven Brands, Inc., or possess substantial experience in the franchise or automotive service industries. This level of experience suggests the management team is familiar with operating a large franchise system and supporting its franchisees.

Potential Mitigations

• A business advisor can help you research the public reputations and track records of the key executives listed.
• It is still beneficial to ask existing franchisees about their direct experiences and the quality of leadership from the management team.
• Reviewing the management history with your attorney can provide additional context and confirm the information presented.

Explanation

This risk was not identified. The franchisor fully discloses its complex parent company structure in Item 1. The FDD includes financial statements for both the guarantor, Driven Systems LLC, and the ultimate parent, Driven Brands, Inc., in Exhibit E. Additionally, a 'Guarantee of Performance' from Driven Systems LLC is provided as Exhibit F. This level of disclosure provides significant transparency into the financial backing and structure of the overall organization.

Potential Mitigations

• Your accountant should review the financial statements for all entities provided, including the parent and guarantor.
• It is advisable for your attorney to analyze the terms and enforceability of the 'Guarantee of Performance' to understand its practical value.
• Discussing the corporate structure with your business advisor can help clarify relationships between the various entities.

Explanation

This risk was not identified. Item 1 discloses the franchisor's predecessors and affiliate relationships in detail. The FDD does not appear to hide or downplay any negative history associated with these entities. Information regarding litigation in Item 3 and bankruptcy in Item 4 is provided for the relevant entities, allowing for a more complete assessment of the system's historical context.

Potential Mitigations

• Your attorney should still carefully review all disclosures related to predecessors and affiliates to ensure a full understanding of the system's history.
• A business advisor can help you research the public reputation of any predecessor entities if you have specific concerns.
• Asking long-tenured franchisees about their experience under any previous ownership can provide valuable insight.