Explanation

This risk was not identified in the FDD Package. Item 20 data shows a very young system with only three operating franchises and reports no terminations, non-renewals, or other cessations. High franchisee turnover is a critical red flag in established systems, often indicating systemic problems like unprofitability or poor support. You should monitor this data in future FDDs as the system grows.

Potential Mitigations

• Your business advisor should explain how to calculate and interpret franchisee turnover rates for future analysis.
• When reviewing future FDDs, having an accountant analyze the tables in Item 20 for any negative trends is a crucial step.
• It is wise to consult your attorney about the significance of different categories in Item 20, such as terminations versus transfers.

Explanation

This risk was not identified in the FDD Package. The business operates in the laundromat industry, a long-established service sector. While it offers a premium version of the service, the core offering is based on sustained consumer demand for laundry services, not a short-term trend or novelty. Therefore, it does not appear to be a fad business with limited long-term viability.

Potential Mitigations

• A business advisor can help you analyze the long-term market trends for laundry services in your specific area.
• Asking your financial advisor to assess the resilience of the premium laundry model to economic shifts is a prudent measure.
• It is wise to have your attorney review the franchise term to ensure it aligns with the time needed to build a stable business.

Explanation

This risk was not identified in the FDD Package. Item 2 shows that the key executives, including the head of franchising, have extensive and relevant experience in franchising with major brands like Burger King, as well as deep experience within P&G's brand and financial management structures. This suggests the leadership team has the necessary expertise to manage a franchise system.

Potential Mitigations

• Your business advisor can help you research the professional backgrounds of the key executives listed in Item 2.
• Consulting your attorney to understand the roles and responsibilities of the management team is a good practice.
• It is still beneficial to ask current franchisees about their direct experiences with the management team's support and strategic direction.

Explanation

This risk was not identified in the FDD Package. Item 1 clearly states that APFI is a wholly-owned subsidiary of The Procter & Gamble Company (P&G), a publicly traded corporation. The franchisor is not owned by a private equity firm, so the specific risks associated with that ownership model, such as a focus on short-term returns over system health, do not apply here.

Potential Mitigations

• A business advisor can help you verify the ownership structure of any franchisor you consider.
• It is good practice to have your attorney review Item 1 of the FDD to understand the franchisor's corporate family.
• Your accountant can provide insight on the different financial implications of corporate versus private equity ownership.

Explanation

This risk was not identified in the FDD Package. Item 1 clearly discloses that The Procter & Gamble Company is the parent company. While P&G's full financial statements are not included in Item 21, the franchisor's dependency on P&G is explicitly stated. Because P&G is a public company, its financials are readily available for review, mitigating the risk of non-disclosure. The core risk here is the dependency itself, which is covered under 'Disclosure of Franchisor's Financial Instability'.

Potential Mitigations

• Your accountant can access and review the public financial statements of a parent company like P&G for a complete financial picture.
• An attorney can advise on whether the parent company has guaranteed any of the franchisor's obligations.
• A business advisor can help you understand the relationship between a subsidiary franchisor and its parent.

Explanation

This risk was not identified in the FDD Package. Item 1 does not list any predecessors for the Tide Laundromat franchise system. It mentions the 'Tide Cleaners' franchise but clarifies it is a separate business offering covered by a separate FDD. Therefore, there is no predecessor history to evaluate for potential inherited issues like litigation or franchisee failures.

Potential Mitigations

• Your attorney should always verify the predecessor disclosures in Item 1 of any FDD.
• When a predecessor is listed, a business advisor can help you research its history for any red flags.
• It is useful to ask an accountant to compare financial data before and after any change in ownership from a predecessor.

Explanation

This risk was not identified in the FDD Package. Item 3 explicitly states, 'No litigation is required to be disclosed in this Item.' This indicates that in its short history, the franchisor has not been involved in the types of litigation that require disclosure, such as franchisee lawsuits alleging fraud or significant actions initiated by the franchisor against franchisees.

Potential Mitigations

• Your attorney should always conduct a thorough review of Item 3 in any FDD for litigation history.
• It is a good practice to ask current franchisees about the dispute resolution culture within the system.
• A business advisor can help you research public records for any litigation that may not have met the threshold for FDD disclosure.