Explanation

The franchisee turnover rates disclosed in Item 20 do not appear to be high. Over the last three years, the number of terminations, non-renewals, and other cessations is low relative to the total number of operating units. While this suggests a degree of stability within the franchise system, you should still investigate the reasons for the few departures that did occur, including units reacquired by the franchisor.

Potential Mitigations

• Speaking with former franchisees listed in Exhibit E can provide insight into why they left the system.
• A discussion with your business advisor can help put these turnover numbers into perspective for the industry.
• Ask the franchisor for more context regarding the units that ceased operations or were reacquired.

Explanation

This risk was not identified in the FDD package. The growth of the franchise system, as shown in Item 20, appears to be steady rather than excessively rapid. A controlled growth rate can be a positive sign, as it may allow a franchisor to scale its support systems effectively to meet the needs of new franchisees.

Potential Mitigations

• Engaging a business advisor to evaluate the franchisor's support infrastructure in relation to its growth is beneficial.
• You should still discuss the quality and timeliness of support with current franchisees.
• Your accountant can help analyze if the franchisor's financial resources in Item 21 are adequate for its planned expansion.

Explanation

This specific risk was not identified. Woodhouse has been franchising since 2003 and has a significant number of operating units, as detailed in Items 1 and 20. This indicates a mature system with an established track record. Investing in a proven system can reduce some risks associated with new ventures, though it does not eliminate them entirely.

Potential Mitigations

• A business advisor can still help you assess the brand's current market position and long-term relevance.
• It is always wise to have your attorney review the franchise agreement for terms reflective of a mature system.
• Discuss the system's evolution and continued support with long-tenured franchisees.

Explanation

The day spa concept is a long-standing and established business model within the broader wellness industry, not a temporary fad. The services offered, such as massages and facials, have consistent consumer demand. The franchisor's operational history of over two decades provides additional evidence of the business's long-term viability.

Potential Mitigations

• A business advisor can help you research the local market demand for high-end spa services.
• Reviewing the franchisor's plans for service innovation with your financial advisor can provide insight into future adaptability.
• It is prudent to analyze local competition to understand the market landscape.

Explanation

This risk was not identified, as Item 2 shows that the key executives at Woodhouse and its parent company have extensive prior experience in franchising and the wellness/beauty industry. An experienced leadership team can be a significant asset in providing effective support, strategic direction, and operational guidance to franchisees.

Potential Mitigations

• Asking current franchisees about their direct experiences with the management team's competence and support is a valuable step.
• A business advisor can help you review the biographies in Item 2 to assess their relevance and depth.
• During your own discussions, you can query management about their long-term vision for the brand.

Explanation

This risk was not identified. The FDD's Item 1 provides a detailed description of the franchisor's parent and affiliate companies, including the ultimate private equity owner. While the structure is complex, the entities appear to be properly disclosed. This provides a clearer picture of the overall corporate structure.

Potential Mitigations

• Your attorney should review the complex corporate structure in Item 1 to explain the relationships between the various entities.
• An accountant should confirm if financials for any parent entities are required and have been provided.
• Understanding which entity holds key assets or provides guarantees is an important discussion to have with your attorney.

Explanation

This specific risk was not identified in the FDD. Item 1 indicates the franchisor has operated continuously since 2003, with a corporate restructuring in 2020, but does not mention acquiring the system from a different predecessor with a separate history. This suggests continuity in the brand's operation and management lineage.

Potential Mitigations

• Having your attorney confirm the corporate history as detailed in Item 1 is still a good practice.
• You can ask long-tenured franchisees about the company's history and any significant changes over the years.
• A business advisor can help you conduct public record searches to verify the company's historical data.