Explanation

The franchise system shows a relatively stable size, with a small net decrease of two outlets in both 2022 and 2023, followed by a net increase of three in 2024. The data for 2022 and 2023 shows a combined 8 outlets "ceased operations" or were terminated, representing a churn rate of approximately 5-6% of the system size in each of those years. While not alarmingly high, this pattern warrants further investigation into franchisee satisfaction and profitability.

Potential Mitigations

• Engage a business advisor to help you contact a significant number of current and former franchisees from the list in Item 20.
• Your accountant should analyze the three-year trend of terminations and cessations to assess system stability.
• A discussion with your attorney is important to understand the typical reasons for franchisee departures in this system.

Explanation

The FDD indicates a period of relatively quick franchise sales and development is planned, with six projected new franchised outlets in the next fiscal year. While growth can be positive, rapid expansion can sometimes strain a franchisor's resources, potentially affecting the quality and availability of training, site selection assistance, and ongoing support for all franchisees. U-Save's financial statements suggest limited resources which could be stretched by growth.

Potential Mitigations

• A business advisor can help you question the franchisor about their plans for scaling support infrastructure to match unit growth.
• It is wise to ask a broad range of existing franchisees about the current quality and responsiveness of franchisor support.
• Your accountant should review the financial statements in Item 21 to assess if the franchisor has the resources to support its growth plans.

Explanation

The executive team, as detailed in Item 2, appears to have extensive experience in the vehicle rental industry through their roles at the parent company, Green Motion, and other major industry players like Hertz and Booking.com. However, U-Save International LLC itself is a new entity formed in 2022. While the industry experience is strong, the management team has a relatively short track record of managing this specific U-Save franchise system under this new corporate structure.

Potential Mitigations

• A business advisor can help you assess how the management's international experience translates to the U.S. market and this specific brand.
• It is wise to speak with franchisees to gauge their opinion of the new management team's effectiveness and support since the 2022 acquisition.
• Your attorney can help clarify the relationship and support agreements between U-Save, its parent U-Save Global LLC, and Green Motion Limited.

Explanation

The FDD clearly discloses the parent company structure in Item 1, with U-Save International LLC being a subsidiary of U-Save Global LLC, which in turn is a subsidiary of Green Motion Limited. However, the FDD does not include the financial statements of these parent companies. While not always required, the absence of parent financials means you cannot fully assess the financial strength of the ultimate entities controlling the system, especially given the large related-party debt owed by U-Save.

Potential Mitigations

• Your accountant should carefully analyze the provided U-Save financials, paying close attention to the related-party transactions detailed in the footnotes.
• A discussion with your attorney is important to understand the legal and financial separation between U-Save and its parent companies.
• You might ask the franchisor if they would be willing to provide financial statements for the parent guarantors.

Explanation

Item 3 discloses one litigation case involving the franchisor's parent, Green Motion Limited, and its key officers. The case, brought by a former Canadian franchisee, alleged violations of franchise law and sought significant damages. Although the FDD states the action was discontinued against the defendants and official confirmation is expected, the existence of such a significant claim against the parent company's management team could be a point of concern for a prospective franchisee.

Potential Mitigations

• A thorough review of the details of this litigation with your attorney is crucial to understand the nature of the allegations.
• You should ask the franchisor for the official confirmation of the suit's discontinuance.
• It is wise to discuss with your business advisor whether this past dispute indicates any potential issues with the management's approach to franchising.