Explanation

The FDD provides audited financial statements for the parent company, Neighborly Assetco LLC, which guarantees the performance of Window Genie SPV LLC ("Window Genie"). These financials show significant assets, positive net worth, and consistent profitability, with a net income of $159 million in 2024. This suggests a strong financial position to support the franchise system. The risk of financial instability appears low.

Potential Mitigations

• An accountant should review the parent company's audited financial statements, including all notes, to confirm its financial health and ability to support the system.
• Discuss the parent guarantee's strength and enforceability with your franchise attorney.
• Your business advisor can help assess the overall stability of the large parent organization and its impact on franchisee support.

Explanation

This risk was not identified. FDD Item 20 data indicates the system has been shrinking over the last three years, not growing rapidly. Rapid growth can strain a franchisor's ability to provide adequate support, so its absence here is notable. However, you should still assess the quality of support for existing franchisees.

Potential Mitigations

• In discussions with current franchisees, inquire about the quality and timeliness of the support you receive from the franchisor.
• Your business advisor can help evaluate if the franchisor's support infrastructure is appropriate for the current system size.
• An accountant's review of the franchisor's financials can help determine if they are investing adequately in franchisee support systems.

Explanation

This risk was not identified. Item 1 indicates the franchise system has been in operation since 1998, providing a long operational history. This is not a new or unproven system. The primary risk is not the system's age, but its recent performance and high turnover rates as disclosed in Item 20.

Potential Mitigations

• A discussion with your business advisor should focus on the system's recent performance trends rather than its age.
• When speaking with franchisees, ask about recent changes to the system and support since the KKR acquisition.
• Your attorney can help you understand any recent structural changes to the franchise entity itself.

Explanation

This risk was not identified. The franchise operates in the established home services industry, offering services like window and gutter cleaning. These services cater to ongoing property maintenance needs and are not considered a fad. The business model appears to be based on sustained consumer demand rather than a short-term trend.

Potential Mitigations

• Engage a business advisor to research the demand for home services in your specific local market.
• An accountant can help you model the potential impact of economic cycles on demand for these types of services.
• When speaking with current franchisees, inquire about the seasonality and consistency of customer demand.

Explanation

This risk was not identified. Item 2 shows that the key executives, including the President, have extensive and relevant experience within the Window Genie system, its parent company Neighborly, and the franchising industry. The management team appears to be well-seasoned and not lacking in relevant expertise.

Potential Mitigations

• Conduct your own research on the professional backgrounds of the key executives listed in Item 2.
• In discussions with franchisees, ask for their direct opinions on the competence and effectiveness of the current management team.
• A business advisor can help you interpret the management team's collective experience in the context of the system's recent performance.

Explanation

This risk was not identified. Item 1 and Item 21 clearly disclose the parent company structure, including the role of Neighborly Assetco LLC. Furthermore, the parent company provides a performance guarantee (Exhibit D) and its audited financial statements are included in Exhibit C, which provides significant transparency.

Potential Mitigations

• Have your accountant review the parent company's financial statements provided in Exhibit C to confirm its financial health.
• Your attorney should review the terms of the Parent Guarantee in Exhibit D to understand the scope of the protection it offers.
• A business advisor can help you understand the complex corporate structure outlined in Item 1.

Explanation

Item 3 discloses two past regulatory actions against the franchisor's predecessor related to advertising violations in 2013 and 2017. While these matters appear to be resolved and involved the prior owner, they indicate a history that warrants attention. You should ensure the current franchisor maintains robust compliance systems to prevent similar issues.

Potential Mitigations

• Discuss the nature and resolution of the predecessor's past litigation in Item 3 with your franchise attorney.
• Inquire with the franchisor about the compliance systems now in place to prevent recurrence of such advertising violations.
• When speaking with long-term franchisees, ask about the transition from the predecessor and the company's current culture of compliance.