Explanation

This risk was not identified. The franchisor, TMH Worldwide, LLC (TMH), is guaranteed by its ultimate parent, Wyndham Hotels & Resorts, Inc. (WHR). The audited financial statements for WHR in Exhibit D show consistent profitability and a positive net worth, indicating the guarantor has the financial resources to support the system and its obligations. Financial instability risk typically stems from a franchisor's inability to provide promised support or remain a viable business, which does not appear to be a concern here.

Potential Mitigations

• An accountant should review the guarantor's financial statements, including all footnotes, to confirm its financial health and ability to support the franchisor's obligations.
• It is wise to discuss the strength and enforceability of the parent company's guaranty with your franchise attorney.
• A business advisor can help you assess if the franchisor's financial stability aligns with its growth plans and support commitments.

Explanation

This risk was not identified. The franchisor, TMH, is a subsidiary of Wyndham Hotels & Resorts, Inc., one of the largest and most experienced hotel franchisors globally. An unproven system typically presents risks like undeveloped support and lack of brand recognition, which are not primary concerns here due to the backing and experience of the parent company. The Trademark Collection brand itself began franchising in 2017, giving it several years of operational history.

Potential Mitigations

• It is still prudent to have your business advisor investigate the specific track record of this particular brand concept within the broader Wyndham portfolio.
• Engaging with your attorney to understand the relationship and support agreements between the franchisor and its parent company is advisable.
• You should ask existing franchisees about their experience with the brand's specific systems and support structures.

Explanation

This risk was not identified. The business concept, a 'soft-branded collection' of unique or independent-style hotels, is an established and recognized segment within the modern hospitality industry. This model is not based on a fleeting trend but on a durable consumer interest in distinctive lodging experiences backed by the reliability of a major brand's reservation and loyalty systems. Therefore, the risk of the business model becoming obsolete due to a passing fad appears low.

Potential Mitigations

• A discussion with a hospitality industry consultant could provide further validation of the long-term viability of the soft-brand hotel concept.
• It is wise to have your financial advisor assess how this model might perform during various economic cycles.
• Your business advisor should help you research the brand's primary competitors to understand the competitive landscape.

Explanation

This risk was not identified. The executive team detailed in Item 2 consists of individuals with extensive and long-term experience in the hospitality industry, franchising, and specifically within the Wyndham parent organization. Key leaders hold senior roles across Wyndham Hotel Group, indicating a deep pool of relevant expertise in managing large-scale franchise systems. This level of experience suggests that management has the capability to operate and support the franchise system effectively.

Potential Mitigations

• Your business advisor can help you research the public reputations and track records of the key executives listed in Item 2.
• Engaging with current franchisees can provide insight into their direct experiences and perception of the management team's competence and support.
• An attorney can review the executives' litigation history in Item 3 for any red flags related to their management conduct.

Explanation

This risk was not identified. Item 1 indicates the franchisor is part of Wyndham Hotels & Resorts, Inc. (WHR), which is a publicly traded company on the New York Stock Exchange. Ownership by a public company, rather than a private equity firm, generally implies a focus that can accommodate longer-term strategic goals for brand health, rather than the typically shorter investment horizons and exit strategies often associated with private equity ownership.

Potential Mitigations

• A financial advisor can help you analyze the parent company's public filings (10-K, 10-Q) to understand its strategic priorities and financial health.
• It may be beneficial to discuss the potential impacts of a future sale of the company on your franchise agreement with an attorney.
• Researching news and analyst reports on the parent company with a business advisor can provide insight into its long-term strategy.

Explanation

This risk was not identified. The FDD clearly discloses the parent company structure in Item 1, identifying TMH Worldwide, LLC as a subsidiary of Wyndham Hotel Group, LLC, which is owned by Wyndham Hotels & Resorts, Inc. (WHR). Furthermore, the FDD provides a full guaranty of performance from WHR and includes WHR's audited financial statements in Exhibit D, ensuring full transparency into the financial health of the ultimate parent entity responsible for backing the franchisor.

Potential Mitigations

• Your attorney should confirm that the parent guaranty provided is legally sound and enforceable in your jurisdiction.
• An accountant should review the parent company's financial statements to verify its capacity to fulfill the guaranty.
• Discuss with a business advisor the operational relationship between the parent and the direct franchisor entity to understand support pathways.

Explanation

This risk was not identified. TMH Worldwide, LLC was formed in 2017 and is the original franchisor for this system. Item 1 does not disclose any predecessors from which TMH acquired the system's assets. While other affiliated Wyndham brands have predecessor histories, there are no specific predecessor-related issues disclosed for the Trademark Collection brand itself that would suggest inherited problems or an obscured negative track record.

Potential Mitigations

• Your attorney should always confirm the business history outlined in Item 1 of the FDD.
• It could be useful to ask long-standing franchisees of other Wyndham brands about the parent company's general practices when acquiring or integrating systems.
• A business advisor can help you research the history of the Trademark Collection brand to ensure no undisclosed entities were involved in its formation.