Content analysis
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Financial report summary
?Risks
- Changes in consumer preferences and perceptions, and in economic, market, and other conditions could adversely affect our business and results of operations.
- Increases in operating costs, including labor and commodity costs and interest rates have, and may again in the future, adversely affect our results of operations.
- Our locations may experience difficulty hiring and retaining qualified personnel, resulting in higher labor costs.
- Insurance coverage may not be adequate, and increased self-insurance and other insurance costs could adversely affect our results of operations.
- Increases in supply costs could adversely affect our results of operations.
- Tariffs imposed by the U.S. and/or other governments and geopolitical uncertainty could increase our supply costs, which could materially and adversely affect our business and results of operations.
- Decreases in our product sourcing revenue could adversely affect our results of operations.
- We depend on key suppliers, including international suppliers, to deliver timely high-quality products at quantities and prices required for our businesses.
- Supply chain shortages and interruptions could adversely affect our business.
- Our business depends on the willingness of suppliers, distributors, and service providers to supply our locations with goods and services pursuant to customary credit arrangements which may be available in the future on less favorable terms or not at all.
- Our failure to build and maintain relationships with insurance partners could adversely affect our business.
- Substantially all of the assets of the Company are pledged as security under the terms of our Indebtedness.
- We may not be able to execute on our plans to open additional locations and enter new markets.
- Our acquisitions, dispositions, and strategic investments involve risks.
- Our business may be adversely impacted by our indebtedness, including additional leverage in connection with acquisitions and other capital expenditure initiatives.
- Our business is subject to seasonality.
- Our business may be adversely impacted by the geographic concentration of our locations.
- Our operations are subject to various risks and uncertainties, including adverse economic conditions or a debt crisis, which could adversely affect our business.
- Our success depends on the effectiveness of our marketing and advertising programs.
- Our failure or our franchisees and independent operators’ failure to comply with health, employment, and other federal, state, local, and provincial laws, rules, and regulations may lead to losses and harm our brands.
- Our locations are subject to certain environmental laws and regulations.
- Complaints or litigation may adversely affect our business and reputation.
- We may have product liability exposure that adversely affects our results of operations.
- We are subject to payment-related risks.
- Catastrophic events may disrupt our business in a manner that adversely affects our business.
- Instability, disruption, or destruction caused by civil insurrection or social unrest may affect the markets in which we operate, our suppliers, customers, sales of products, and customer service.
- We and our franchisees lease or sublease the land and buildings where a number of our locations are situated, which could expose us to possible liabilities and losses.
- Our current locations may become unattractive, and attractive new locations may not be available for a reasonable price, if at all, which could adversely affect our business.
- Our financial performance could be materially adversely affected if we fail to retain, or effectively respond to a loss of, key executives.
- We depend on our intellectual property to protect our brands, we may fail to establish trademark rights in the countries we operate and litigation to enforce or defend our intellectual property rights may be costly.
- If franchisees and other licensees do not observe the required quality and trademark usage standards, our brands may suffer reputational damage, which could in turn adversely affect our business.
- We may become subject to third-party infringement claims or challenges to intellectual property validity.
- We do not own certain software that is used in operating our business and our proprietary platforms and tools incorporate open-source software.
- The occurrence of cyber incidents, or a deficiency in cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise, corruption, or loss of data, and/or damage to our employee and business relationships, all of which could lead to loss and harm our business.
- Changing regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information, and harm our brands in a manner that adversely affects our business.
- A majority of our locations are owned and operated by franchisees and, as a result, we are highly dependent upon our franchisees.
- Franchisee changes in control may adversely impact franchisee operations.
- Franchise documents are subject to termination and non-renewal.
- Our location development plans under development agreements may not be implemented effectively by franchisees.
- If our franchisees do not comply with their franchise agreements and policies or participate in the implementation of our business model, our business could be harmed.
- Our substantial indebtedness could adversely affect our financial condition.
- The documents governing our indebtedness have restrictive terms and our failure to comply with any of these terms could put us in default, which would have an adverse effect on our business and prospects.
- The Securitization Senior Notes Indenture governing the securitized debt facility may restrict the cash flow from the entities subject to the securitization to us and our subsidiaries and, upon the occurrence of certain events, cash flow would be further restricted.
- Our stock price may fluctuate significantly.
- Our ability to raise capital in the future may be limited.
- We are a holding company and rely on dividends, distributions, and other payments, advances, and transfers of funds from our subsidiaries to meet our obligations.
- We are required to make payments under a Tax Receivable Agreement for certain tax benefits, which amounts are expected to be material.
- Our Principal Stockholders collectively have significant influence over us, including control over decisions that require the approval of stockholders, which could limit your ability to influence the outcome of matters submitted to stockholders for a vote.
- We are a “controlled company” within the meaning of NASDAQ rules and, as a result, qualify for exemptions from certain corporate governance requirements that we have relied on in the past and may do so in the future.
- Our organizational documents and Delaware law may impede or discourage a takeover, which could deprive our investors of the opportunity to receive a premium on their shares.
- Our certificate of incorporation provides that certain courts in the State of Delaware or the federal district courts of the U.S. for certain types of lawsuits is the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
- Our certificate of incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities.
- Future sales of our common stock in the public market, or the perception in the public market that such sales may occur, could reduce our stock price.
Management Discussion
- Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations