Explanation

As The TEN is a new franchisor that began offering franchises in April 2025, there is no history of franchisee turnover to analyze in Item 20. While this means no negative data exists, it also means there is no track record to assess franchisee satisfaction or system viability. Monitoring franchisee success will be critical for the first few years of operation.

Potential Mitigations

• Your business advisor should help you understand the risks of joining a new system with no franchisee performance history.
• Engaging with the very first franchisees as they join the system will provide crucial early insights.
• An attorney can help you understand your contractual rights and obligations if the system struggles to grow.

Explanation

This risk was not identified as the franchise system is new and has not yet experienced growth, rapid or otherwise. As a prospective franchisee, you would be among the first to join. Monitoring the franchisor's ability to scale its support systems if growth does accelerate will be important for early entrants.

Potential Mitigations

• Discussing the franchisor's plans for scaling its support infrastructure with your business advisor is a prudent step.
• Asking the franchisor about their capacity to handle growth can provide insight into their strategic planning.
• An accountant can help evaluate whether the franchisor's financial model supports sustainable growth.

Explanation

This risk was not identified. The nail salon industry is well-established and has demonstrated sustained consumer demand over many years. While market trends within the beauty sector can change, the core business model is not based on a short-lived fad, reducing the risk of a sudden collapse in customer interest.

Potential Mitigations

• It is still valuable to research local competition and market demand for these specific services with your business advisor.
• Discussing the franchisor's plans for innovation and service evolution can provide insight into long-term strategy.
• Your accountant can help you model the financial impact of potential shifts in consumer beauty preferences.

Explanation

This risk was not identified in the FDD. Item 1 indicates the franchisor is owned by its founding members, not a private equity firm. This typically means decisions may be more focused on the long-term health of the brand rather than short-term investor return timelines, though it can also be associated with more limited capital resources.

Potential Mitigations

• It is still wise to have your attorney review the assignment clauses in the Franchise Agreement to understand what happens if the system is sold in the future.
• A business advisor can help you understand the pros and cons of different ownership structures.
• Discuss the founders' long-term vision and commitment to the brand with them directly.

Explanation

This risk was not identified, as Item 1 explicitly states that the franchisor does not have a parent company. The disclosure appears to be compliant in this regard, presenting the franchisor as a standalone entity. Therefore, risks associated with the financial instability or influence of an undisclosed parent are not applicable here.

Potential Mitigations

• Your attorney can confirm the corporate structure to ensure there are no undisclosed controlling entities.
• An accountant should evaluate the franchisor's standalone financial statements, understanding there is no parent company to provide a financial backstop.
• A business advisor can help assess the stability of a standalone franchisor versus one with parent company support.

Explanation

This risk does not appear to be present, as Item 1 of the FDD states the franchisor has no predecessors. This means you do not have to be concerned about inheriting historical issues from a prior company that operated the franchise system. The analysis of the system's history begins with this franchisor.

Potential Mitigations

• Your attorney can verify the history of the business to ensure no predecessor entities have been omitted.
• A business advisor can help you research the history of the affiliate companies mentioned in Item 1.
• Focus due diligence on the operating history of the affiliate locations to understand the brand's track record.

Explanation

This risk was not identified, as Item 3 discloses no history of litigation involving the franchisor, its management, or predecessors. While this is positive, it is also expected for a brand-new franchise system with no operating history as a franchisor. Future FDDs should be monitored for any changes.

Potential Mitigations

• A business advisor can assist you in performing public records searches to confirm the absence of litigation.
• Your attorney can help you understand the types of disputes that commonly arise in franchise systems.
• Discussing dispute resolution philosophies with the franchisor can provide insight into their approach to potential conflicts.