Explanation

This risk was not identified. FDD Item 20 data does not indicate a high rate of franchisee terminations, non-renewals, or other cessations of business. Low turnover can suggest a stable system and franchisee satisfaction. However, it is still crucial to understand the reasons for any departures that did occur.

Potential Mitigations

• It is still advisable to contact former franchisees listed in the FDD to understand their reasons for leaving the system.
• Your accountant can help you calculate the annual turnover rate from Item 20 data to compare against any industry benchmarks you can find.
• During discussions with the franchisor, your business advisor can help you ask about the circumstances surrounding any franchisee departures.

Explanation

This risk was not identified. Vital Care LLC discloses that it has been granting franchises since 1986, indicating a long operational history and an established business model. An unproven system presents higher risks related to brand recognition, operational support, and overall viability, which does not appear to be the case here.

Potential Mitigations

• Your business advisor should still verify the franchisor's claims about its history and the maturity of its operating systems.
• It is wise to have your attorney review the business's history as described in Item 1 for any details about its evolution.
• Discuss the system's long-term performance and brand strength with experienced franchisees.

Explanation

This risk was not identified. The business of providing patient infusion and pharmaceutical services is a well-established and integral part of the healthcare industry, not a temporary trend. A fad-based business carries the risk that consumer interest will decline, potentially leaving you with a non-viable business and ongoing contractual obligations.

Potential Mitigations

• A business advisor can help you research the long-term demand and competitive landscape for home infusion services in your specific market.
• Even in an established industry, consulting a financial advisor to assess the business model's resilience to economic shifts is a prudent step.
• Your attorney should review the Franchise Agreement for any flexibility in adapting services to future healthcare trends.

Explanation

This risk was not identified. FDD Item 2 discloses an executive team with extensive and relevant experience in the healthcare, home infusion, and franchising industries. Some executives have also been franchisees themselves. Inexperienced management can pose a risk as they may lack the specific skills to provide effective support and strategic direction for a franchise system.

Potential Mitigations

• It is still beneficial to discuss the management team's accessibility and quality of support with current franchisees.
• Your business advisor can help you research the professional backgrounds of the key executives listed in Item 2.
• When meeting the franchisor, prepare questions for the management team regarding their vision and support philosophy.

Explanation

This risk was not identified. FDD Item 1 clearly discloses the parent company, Vital Care Holdings, LLC, and its ownership structure. Failing to disclose a parent company can obscure the true financial backing and control structure of a franchise system, which is a significant red flag for prospective franchisees.

Potential Mitigations

• Your attorney should always verify that the entities disclosed in Item 1 match corporate records for the state of organization.
• An accountant should confirm if the provided financial statements are for the correct entity and assess if parent financials should have been included.
• Engaging a business advisor to map out the complete corporate structure can provide valuable context for your investment decision.

Explanation

This risk was not identified. The FDD states that Vital Care LLC has not had any predecessors in the 10-year period before the disclosure document's issuance date. A history with predecessors can sometimes introduce risks related to past litigation, bankruptcy, or high franchisee turnover that might not be immediately apparent, so its absence is a positive sign.

Potential Mitigations

• Your attorney can help you perform due diligence to confirm the company's history as stated in Item 1.
• Even without predecessors, a business advisor can help you research the long-term history of the brand and its reputation.
• Ask long-tenured franchisees about the history of the company and any significant past events or ownership changes.

Explanation

This risk was not identified. FDD Item 3 states that no litigation is required to be disclosed. A pattern of litigation, particularly lawsuits initiated by franchisees alleging fraud or misrepresentation, can be a major red flag indicating systemic problems with the franchisor's business practices or franchisee relationships.

Potential Mitigations

• It is wise to have your attorney perform a public records search to see if any litigation exists that was not required to be disclosed.
• You should still ask current and former franchisees about their experiences and whether they have had any significant disputes with the franchisor.
• Your business advisor can help you research online forums and news articles for any reports of franchisee dissatisfaction or legal disputes.