Angry Chickz
Initial Investment Range
$95,000 to $1,323,000
Franchise Fee
$70,000 to $150,000
The franchise offered is for an Angry Chickz restaurant featuring boneless, breaded chicken, fries, mac & cheese, coleslaw, rice and other authorized food, beverages and novelty items.
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Angry Chickz May 9, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: July 16, 2025
DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The franchisor, Angry Chickz Franchising, LLC (ACF), has significant financial weaknesses. The audited financial statements in Item 21 show a net loss of over $436,000 and a member's deficit of over $888,000 for 2024. The FDD includes a 'Special Risk' warning about its financial condition and notes its dependence on its parent company for funding. This raises concerns about its ability to support you and grow the brand without relying on new franchise fees.
Potential Mitigations
- Your accountant must conduct a thorough analysis of the audited financials, including the notes, to assess the franchisor's viability and dependence on its parent.
- Discuss the explicit 'Financial Condition' special risk warning and the practical implications of the required fee deferrals with your franchise attorney.
- A business advisor can help you evaluate if the franchisor has sufficient resources to fulfill its support obligations as the system grows.
High Franchisee Turnover
Low Risk
Explanation
This risk was not identified, as Item 20 data does not show high franchisee turnover. However, the franchise system is extremely new, with only one franchisee operating as of the end of the most recent fiscal year. Therefore, the available data is insufficient to meaningfully assess long-term franchisee satisfaction or potential future turnover rates. A lack of history is itself a risk factor.
Potential Mitigations
- Speaking with the single existing franchisee listed in Item 20 is essential to understand their initial experience; your attorney can help prepare questions.
- Your business advisor should help you monitor the system's franchisee success and turnover rates as it matures.
- Inquire with the franchisor about their franchisee support systems designed to ensure long-term success and prevent future turnover.
Rapid System Growth
Medium Risk
Explanation
Item 20 indicates plans to open four new franchised outlets and six new company-owned outlets in the upcoming year. This represents very rapid expansion for a company that has only been franchising for a little over a year and has a weak financial position, as shown in Item 21. Such growth could strain ACF's resources, potentially leading to inadequate site selection support, training, and operational assistance for new franchisees like you.
Potential Mitigations
- Inquire directly with the franchisor about their specific plans to scale their support staff and infrastructure to match this projected growth.
- A discussion with your business advisor can help you assess whether the franchisor's management team has the experience to handle this rate of expansion.
- Your accountant should review the franchisor's financials to determine if they have the capital to support this growth without solely relying on new franchise fees.
New/Unproven Franchise System
High Risk
Explanation
The franchisor entity was formed in June 2023 and began franchising only a few months later. The FDD contains an explicit 'Special Risk' warning regarding its short operating history. As a new and unproven franchise system, its operational support, brand recognition, and long-term business model viability are not yet established. Early franchisees like you bear a greater risk of system-wide challenges or failure compared to investing in a mature brand.
Potential Mitigations
- A thorough review of the management team's prior industry and franchising experience in Item 2 is critical; a business advisor can help with this.
- Given the higher risk, it is crucial that your attorney attempts to negotiate more favorable terms, such as better protections or lower fees.
- Your accountant should help you create conservative financial projections that account for the uncertainties of a new, unproven brand.
Possible Fad Business
Medium Risk
Explanation
This franchise operates in the highly competitive 'Nashville Hot Chicken' segment of the fast-casual market. While currently a very popular food trend, you should consider the risk that consumer tastes may shift over time. Investing in a concept heavily tied to a specific trend carries the risk of declining sales if the trend's popularity wanes during your long-term contract, potentially affecting your return on investment.
Potential Mitigations
- Your business advisor can help you conduct independent market research to assess the long-term consumer demand for this specific food concept in your area.
- Inquire with the franchisor about their research and development plans for new menu items and concepts to adapt to changing consumer preferences.
- Discuss the business model's resilience to market shifts and economic downturns with your financial advisor.
Inexperienced Management
Medium Risk
Explanation
While Item 2 shows that some executives have prior restaurant industry experience, the franchising entity itself, ACF, is very new, having been formed in 2023. The entity lacks a proven track record of successfully managing a franchise system, providing support, and enforcing quality control across multiple franchised locations. This lack of direct franchising experience as a company presents a risk to the quality and effectiveness of the support you will receive.
Potential Mitigations
- Engage a business advisor to help you thoroughly vet the specific franchising experience of each member of the management team.
- Speaking with the first few franchisees is critical to gauge the real-world quality of the initial support and training provided.
- Your attorney should clarify the franchisor's specific commitments for ongoing support as detailed in Item 11 and the Franchise Agreement.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD. Item 1 indicates the franchisor is a wholly-owned subsidiary of Angry Chickz Inc., which appears to be founder-controlled. There is no disclosure of ownership by a private equity firm. This is important because PE ownership can sometimes lead to a focus on short-term returns over the long-term health of franchisees.
Potential Mitigations
- It is still prudent to ask your attorney to verify the franchisor's ownership structure through public records.
- A business advisor can help you research the history and reputation of the parent company and its principals.
- During your due diligence, asking other franchisees about any recent changes in ownership or management philosophy is a valuable step.
Non-Disclosure of Parent Company
Low Risk
Explanation
This specific risk was not identified. Item 1 clearly discloses that Angry Chickz Inc. is the parent company of the franchisor. Furthermore, the notes to the financial statements in Item 21 explicitly state that the franchisor is financially dependent on its parent, providing a clear picture of the relationship and associated risks.
Potential Mitigations
- Your accountant should review the parent company's financials if they are ever provided or made public to assess the strength of the entity supporting the franchisor.
- Ensure any financial support agreement between the parent and the franchisor is reviewed by your attorney for its terms and duration.
- Your business advisor can help you research the parent company's track record and overall stability.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD. Item 1 states that ACF has no predecessors. The document is clear that the business concept was developed by its parent company, but the franchising entity itself is new. Therefore, there is no hidden history of a prior franchisor entity to investigate.
Potential Mitigations
- Your attorney should confirm the corporate history of the franchisor and parent company to ensure there are no undisclosed predecessor entities.
- A business advisor can help you research the full history of the 'Angry Chickz' brand under its parent company.
- In discussions with long-term employees or managers of corporate stores, you could inquire about the brand's history before franchising began.
Pattern of Litigation
Medium Risk
Explanation
Item 3 does not disclose any litigation against the company. However, Item 4 discloses that the founder and CEO, David Mkhitaryan, filed for Chapter 7 personal bankruptcy, which was discharged in 2019. While this is not litigation against the franchisor entity, a past bankruptcy of the key executive could be a concern for a prospective franchisee regarding historical financial management and stability, which may impact the company's leadership and decision-making.
Potential Mitigations
- Discuss the potential implications of the CEO's past personal bankruptcy on the current business operations and stability with your attorney and accountant.
- Consider this information as part of your overall assessment of the franchisor's management team and associated risks with your business advisor.
- You may want to discreetly inquire with the franchisor about the circumstances surrounding this event to gauge their transparency.
Disclosure & Representation Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Financial & Fee Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Legal & Contract Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Territory & Competition Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Regulatory & Compliance Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Franchisor Support Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
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Operational Control Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Term & Exit Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Miscellaneous Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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