Explanation

This risk was not identified. The national franchise system is large and established, but Item 20 data shows the system has been shrinking in size for the past three consecutive years, which is a significant concern related to franchisee turnover rather than rapid growth. The support infrastructure does not appear to be at risk of being outpaced by growth.

Potential Mitigations

• It is always prudent to ask existing franchisees about the quality and responsiveness of the support they receive from the franchisor.
• A business advisor can help you evaluate whether the franchisor's support systems are adequate for the current number of franchisees.
• Ensuring the franchisor's support obligations are clearly defined in the franchise agreement is a task for your attorney.

Explanation

This risk was not identified. The national franchisor, Vanguard Cleaning Systems, Inc. (Vanguard), was established in 1984 and has extensive experience in franchising. The regional sub-franchisor, Delmar, has been operating since 2005. The system is mature and established, not new or unproven. However, concerns about the system's current health are noted under other risks like "High Franchisee Turnover" and "Disclosure of Franchisor's Financial Instability".

Potential Mitigations

• Even in an established system, speaking with recent franchisees about their onboarding and initial support experience is valuable.
• A business advisor can help you assess how the franchisor's long history translates into current, effective support systems.
• Your attorney should verify that the franchisor's long operational history is accurately reflected in the FDD.

Explanation

This risk was not identified. The business is in the commercial janitorial services industry, which is a long-standing and essential business sector rather than a fad. The franchisor has been operating for several decades, indicating sustained market demand for its services.

Potential Mitigations

• Engaging a business advisor to research the long-term outlook for the commercial cleaning industry in your specific market is a wise step.
• Discuss with current franchisees how demand for their services has evolved over time.
• Your accountant can help you model financial projections based on the stable, rather than trend-driven, nature of this industry.

Explanation

This risk was not identified. Item 2 shows that the principal officers of both the sub-franchisor (Delmar) and the national franchisor (Vanguard) have extensive and long-term experience in the janitorial services and franchising industries. Key personnel have been with the company for many years, indicating a stable and experienced management team.

Potential Mitigations

• It is still beneficial to discuss the management team's reputation and accessibility with current franchisees.
• A business advisor can help you research the professional backgrounds of the key executives listed in Item 2.
• Confirming that the experience listed aligns with the support obligations promised in the agreement is a task for your attorney.

Explanation

This risk was not identified in the documents. Item 1 does not indicate that the franchisor or its parent company is owned or controlled by a private equity firm. The ownership appears to be stable and held by individuals with long-term involvement in the company.

Potential Mitigations

• A business advisor can help you research the franchisor’s ownership structure to confirm the absence of private equity involvement.
• During discussions with the franchisor, it's useful to ask about their long-term vision for the company.
• An attorney should review the assignment clauses in the franchise agreement to understand your rights if the company is sold in the future.

Explanation

This risk was not identified. The FDD discloses the relationship between the sub-franchisor (Delmar) and the national franchisor (Vanguard). Financial statements are provided for both entities. There is no indication of an undisclosed parent company whose financial information would be material to your decision.

Potential Mitigations

• Your attorney should confirm that all relevant parent and affiliate relationships are properly disclosed in Item 1.
• It is important to have your accountant review the financial statements of all disclosed entities, including any guarantors of the franchisor's performance.
• If any confusion about the corporate structure exists, seeking clarification from the franchisor in writing is advisable.

Explanation

This risk was not identified. Delmar Corporate Cleaning Services, Inc. (Delmar) notes a former affiliate, D&M Corporate Cleaning Services, Inc., which was merged into Delmar in 2011. This appears to be a corporate restructuring rather than an acquisition of a troubled system from a predecessor. The FDD does not indicate any negative history associated with this predecessor entity that would pose a risk.

Potential Mitigations

• Asking long-term franchisees about their experience before and after the 2011 merger could provide additional context.
• Your attorney can conduct public records searches on the predecessor entity to ensure no undisclosed issues exist.
• A business advisor can help you understand the implications of the corporate history described in Item 1.