Explanation

The franchisor, TWO MEN AND A TRUCK SPE LLC (TMAJT LLC), is a new entity relying on the financial strength of its parent companies, whose audited financial statements are provided. The parent guarantors appear profitable and have significant assets. Therefore, a direct risk of franchisor financial insolvency seems low at this time, as they are backed by a large, established organization. However, the performance of the direct franchisor entity itself is not independently demonstrated.

Potential Mitigations

• Engage an accountant to review the financial statements of the parent and guarantor entities to assess their ability to support this new franchise system.
• A thorough review of the Guaranty of Performance in Exhibit L with your attorney is crucial to understand its specific protections and limitations.
• Ask your business advisor to assess the franchisor’s reliance on the parent company for operational funding and support.

Explanation

This specific risk was not identified in the FDD Package. Junk removal is a well-established service industry with consistent demand. A business being a 'fad' is a risk when its appeal is tied to a short-lived trend, potentially leaving you with a worthless business and ongoing contractual obligations after public interest fades. This does not appear to be the case here.

Potential Mitigations

• A business advisor can help you research the long-term market trends and sustainability for any industry you consider entering.
• Analyze the business's resilience to economic downturns and changing consumer tastes with a financial advisor.
• Evaluate the franchisor's commitment to innovation and brand evolution with your attorney by reviewing Item 11.

Explanation

This specific risk was not identified in the FDD Package. The franchisor is transparent about its complex corporate structure, including its direct and indirect parent companies within the ServiceMaster and Roark Capital families. The FDD includes audited financial statements for the key parent entities that provide support and a performance guaranty, offering a reasonable degree of financial transparency for the entities backing the franchise.

Potential Mitigations

• Your attorney should always confirm that all parent companies, guarantors, and significant affiliates are properly disclosed in Item 1.
• An accountant should verify that if a parent's financial strength is essential, their financial statements are included in Item 21 as required.
• Investigating the relationship and dependencies between a franchisor and its parent companies is a key due diligence step for your business advisor.

Explanation

This specific risk was not identified in the FDD Package. The franchisor clearly discloses its relationship with its predecessor, Two Men and a Truck/International, LLC, a well-known moving company. The FDD does not appear to hide or downplay any negative history associated with the predecessor or the brand's transition into this new franchise concept. The affiliation is presented as a strength of the brand.

Potential Mitigations

• It is wise for your attorney to review Item 1 for any predecessor information and cross-reference it with Items 3 and 4 for any related litigation or bankruptcy history.
• If a predecessor is identified, a business advisor can help you conduct independent research on their reputation and history.
• Asking long-tenured employees or franchisees (if applicable) about their experience under a predecessor can provide valuable insights.

Explanation

This specific risk was not identified in the FDD Package. Item 3 does not disclose any litigation against the franchisor, TMAJT LLC. The disclosed litigation is against affiliated companies (Arby's, Dunkin') and relates to past anti-poaching clauses and data security, not a pattern of franchisee claims for fraud or misrepresentation against this specific franchise system or its direct parents. Therefore, a pattern of problematic litigation is not evident.

Potential Mitigations

• A thorough review of Item 3 with your attorney is crucial to understand the nature and potential impact of any disclosed litigation.
• Your attorney can conduct independent searches for litigation involving the franchisor that may not have been required to be disclosed.
• Always treat a history of franchisee lawsuits alleging fraud or misrepresentation as a significant red flag with your attorney.