Explanation

This risk was not identified in the FDD package. As a new franchise system with no operational or former franchisees as of the end of 2023, there is no history of franchisee turnover to analyze. High turnover is generally a significant red flag indicating potential systemic problems, so its absence here is merely due to the system's infancy. You will be one of the first to establish a track record.

Potential Mitigations

• Your attorney can advise on negotiating stronger protections in the franchise agreement, given you are an early franchisee in an unproven system.
• A business advisor can help you establish clear performance metrics to monitor your investment's health from the very beginning.
• Discuss with your accountant the financial risks of being one of the first franchisees in a new system with no performance history.

Explanation

This risk was not identified in the FDD package. Item 20 data shows that Weighless MD is a new system with only two franchise agreements signed and no open outlets by the end of 2023. The concern is not rapid growth straining support, but rather a lack of growth and an unproven ability to attract and sustain franchisees. The risk profile is that of a startup, not a rapidly expanding system.

Potential Mitigations

• A business advisor can help you assess the market demand and the franchisor's growth strategy to gauge future system viability.
• Discuss with your accountant the potential cash flow implications of slow brand growth and minimal peer support.
• Your attorney should review the franchisor's obligations to ensure they are not contingent on system size.

Explanation

This risk was not identified in the FDD package. The information in Item 1 and Item 2 suggests that Weighless MD is owned and operated by its founding management team. There is no disclosure of ownership by a private equity firm or similar investment group. Therefore, risks typically associated with short-term, profit-focused investment horizons of such firms do not appear to be present here.

Potential Mitigations

• Your attorney can help you verify the ownership structure through public records to confirm the absence of institutional investors.
• In any franchise, it is wise to have your accountant review the franchisor's financials for signs of excessive debt or unusual financial arrangements.
• A business advisor can help you understand the long-term vision of the current owners.

Explanation

This risk was not identified in the FDD package. Item 1 clearly states, "We do not have a parent or predecessors." It does disclose an affiliate, Weighless MD, LLC, and the relationship between the two entities appears straightforward. There is no indication of a controlling parent company whose financial information or influence is being obscured.

Potential Mitigations

• Your attorney can confirm the corporate structure and the legal relationship between the franchisor and its affiliate.
• An accountant should review the affiliate's financial performance if possible, as it is the basis for the Item 19 FPR.
• A business advisor can help you assess the operational reliance of the new franchisor on its more established affiliate.

Explanation

This risk was not identified in the FDD package. According to Item 1, Weighless MD Franchises, LLC is a new entity and does not have any predecessors. The business model is based on an affiliated company, but there has been no acquisition of a prior franchise system's assets. Therefore, there are no inherited issues from a predecessor to consider.

Potential Mitigations

• Your attorney can verify the corporate history to confirm there are no undisclosed predecessors.
• A business advisor can help you research the history of the affiliated company to understand its background and reputation.
• Your accountant should analyze the provided financials, keeping in mind they represent a startup entity without a predecessor's history.

Explanation

This risk was not identified in the FDD package. Item 3 states that no litigation is required to be disclosed. As a new franchisor that has not yet had an operational franchisee, it has not had time to develop a history of litigation with franchisees. This lack of litigation history provides no information, either positive or negative, about the franchisor's future conduct.

Potential Mitigations

• Your attorney can conduct a public records search to confirm the absence of litigation against the franchisor or its principals.
• A business advisor can help you evaluate other factors, such as management's background, to gauge their potential approach to disputes.
• It is important to have your attorney review the dispute resolution clauses in the Franchise Agreement to understand how conflicts will be handled.