Explanation

This risk was not identified in the FDD package. Rapid system growth can strain a franchisor's resources, potentially leading to inadequate support for new and existing franchisees. Analyzing Item 20 for sharp increases in the number of outlets year-over-year is a key step in assessing this risk. While the system shows steady growth, it does not appear to be expanding at a rate that would, on its own, suggest support systems are over-stressed.

Potential Mitigations

• A discussion with your business advisor can help you assess whether the franchisor's support infrastructure, as described in Item 11, is adequate for its current size and growth rate.
• Contacting a mix of new and established franchisees from the list in Item 20 is a good way to gauge the current quality and responsiveness of franchisor support.
• Your accountant should review the franchisor's financial statements to determine if they are investing adequately in support infrastructure to match growth.

Explanation

The current franchisor entity, Window Gang, LLC, was formed in September 2022 and began offering franchises in May 2023. While the franchisor entity itself is new, it is part of a large, experienced franchise holding company (Premium Service Brands) and acquired a pre-existing brand with a long operational history dating back to 1993. Therefore, while the direct franchisor is new, the system and its ultimate management are not unproven, which mitigates this risk.

Potential Mitigations

• With your business advisor, investigate the track record of the parent company, Premium Service Brands, and its management of other franchise systems.
• Engaging with franchisees who have been with the system through the ownership changes can provide insight into the transition and current support levels.
• Your attorney should review the acquisition details in Item 1 to understand what assets and obligations the new franchisor assumed from the predecessor.

Explanation

This risk was not identified in the FDD package. A fad business is one based on a short-lived trend, posing a risk of failure once consumer interest declines. The exterior cleaning industry, including window, gutter, and pressure washing services, generally serves a consistent and long-term market need for property maintenance. This suggests the business model is based on sustained consumer demand rather than a fleeting trend, making it less likely to be a fad.

Potential Mitigations

• To assess long-term viability, it is wise to research the local market demand for exterior cleaning services with a business advisor.
• Exploring the franchisor's plans for service innovation and adaptation in Item 11 can provide insight into its long-term strategic vision.
• Your financial advisor can help you consider the business model's resilience to economic cycles and changing consumer spending habits.

Explanation

The management team of the franchisor and its parent company, Premium Service Brands, has extensive experience managing a portfolio of numerous franchise brands in the home services industry. Key executives listed in Item 2, such as the CEO, have been involved with franchising for many years. This extensive experience in both the industry and in managing franchise systems suggests that this particular risk is not a significant concern for this franchise offering.

Potential Mitigations

• It is still prudent to review the specific backgrounds of the key personnel listed in Item 2 with your business advisor to understand their direct relevance to this brand.
• Asking current franchisees about their direct experiences with the management team's competence and support can provide valuable, real-world insight.
• Your attorney can help you confirm that the management team's experience aligns with the support obligations outlined in Item 11.

Explanation

The FDD discloses that the current franchisor acquired the system from a predecessor in 2023, who had acquired it from another predecessor in 2020. The brand itself has a long history. While the FDD provides information on these predecessors, it's important to recognize that the business has undergone multiple ownership and management changes. A lawsuit involving the earliest predecessor is disclosed in Item 3. This history could bring inherited challenges or changes in culture and support.

Potential Mitigations

• It would be beneficial to speak with long-term franchisees who have operated under previous ownership to understand the system's evolution and the impact of these changes.
• A thorough review of the predecessor information in Items 1, 3, and 20 with your attorney is important to grasp the full history.
• Your business advisor can help you assess how the current parent company's management style might differ from that of the predecessors.