Explanation

This risk was not identified in the FDD Package. While the system shows growth in the most recent year, it is not so extreme as to suggest the support infrastructure is currently overstretched. However, rapid growth can strain a franchisor's ability to provide adequate training, site selection assistance, and ongoing operational support, potentially diluting brand quality and leaving you without the help you need to succeed. Continuous monitoring of this trend is important.

Potential Mitigations

• Discuss the franchisor's plans for scaling its support staff and systems to match future growth with your business advisor.
• An accountant can help review the franchisor's financials to assess if they have allocated sufficient resources for support infrastructure.
• Ask current franchisees about their perception of the quality and timeliness of support as the system has grown.

Explanation

This risk was not identified in the FDD Package. The plumbing and drain service industry is a well-established, essential service sector with consistent, long-term consumer and commercial demand. The business model is not based on a fleeting trend or novelty. However, like any business, it is subject to economic cycles and competition, which could affect growth and profitability. Your success will depend on operational execution rather than the longevity of a consumer fad.

Potential Mitigations

• Your business advisor can help you research local market demand and competition for plumbing services.
• Assess the franchisor’s plans for innovation and service development to maintain a competitive edge.
• Creating a robust local marketing and business development plan is crucial for establishing your presence in the market.

Explanation

This risk was not identified in the FDD Package. The disclosure in Item 2 indicates that the key executives of PLUMBERZ and its parent, BELFOR Franchise Group, have extensive experience in both franchising and the specific industry. For example, the President has been in this role since 2008 with the predecessor and has served on the Kohler Plumbing Advisory Board. This experience may reduce risks associated with unproven management or inadequate support systems.

Potential Mitigations

• Speaking with current franchisees can provide insight into the quality of management's support and strategic direction.
• A business advisor can help you assess how management's experience with other brands may benefit the Z PLUMBERZ system.
• Your attorney should still review the obligations of the franchisor in the agreement to ensure support commitments are clearly defined.

Explanation

This risk was not identified in the FDD Package. Item 1 clearly discloses that PLUMBERZ acquired the assets of a predecessor, Plumbing Professors, LLC, in 2019. It states that the predecessor was not a franchise company. The FDD appears to provide the required historical context. However, it's always wise to remember that the current franchise system's track record began in 2019, and any operational history of the predecessor may not be fully representative of the franchise model's performance.

Potential Mitigations

• A review with your attorney of the asset purchase details can help clarify what, if any, liabilities or operational norms were inherited.
• When speaking with franchisees, ask about the transition from the predecessor's business model to the current franchise system.
• Your business advisor can help you focus due diligence on the franchise system's performance since 2019.

Explanation

This risk was not identified in the FDD Package. Item 3 states, "No litigation is required to be disclosed in this Item." The absence of disclosed litigation against the franchisor alleging fraud, misrepresentation, or franchise law violations is a positive indicator. However, this does not mean no disputes exist, only that they have not risen to the level of materiality requiring disclosure under federal and state franchise laws.

Potential Mitigations

• Your attorney can help you understand the specific criteria for litigation disclosure in Item 3.
• It is still essential to ask current and former franchisees about their experiences and if they have had any significant disputes with PLUMBERZ.
• A business advisor can help you search public records or news archives for any disputes that may not have required FDD disclosure.