Another Broken Egg Cafe Logo

Another Broken Egg Cafe

Another Broken Egg of America Franchising, LLC
https://www.anotherbrokenegg.com
1-407-440-0450
5955 T.G. Lee Boulevard, Suite 100, Orlando, FL 32822

Initial Investment Range

$802,400 to $1,599,000

Franchise Fee

$55,000

Another Broken Egg Cafes are distinctive, Cafe-style restaurants featuring specialty breakfast, brunch and lunch items consisting of egg and omelet dishes, gourmet waffles, pancakes and French toast, salads, sandwiches, beverages and related menu items for eat-in and take-away service.

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Another Broken Egg Cafe April 18, 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.

1

Franchisor Stability Risks

Start Here
Total: 10
3
2
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor’s audited financial statements in Exhibit G show a working capital deficit. More significantly, state-specific addenda for Virginia, Maryland, and North Dakota explicitly highlight the franchisor's weak financial condition as a risk, with some states imposing fee deferrals as a result. This calls into question the franchisor’s ability to provide ongoing support and meet its obligations, a risk confirmed by regulators. Note 9 also discloses a very large guarantee of its parent company's debt.

Potential Mitigations

  • Your accountant must conduct a thorough review of the audited financial statements, including all notes, to assess the company's financial viability.
  • Discuss the implications of the state-mandated fee deferrals and explicit financial risk warnings with your franchise attorney.
  • It is critical to ask the franchisor about its plans to address its working capital deficit and the large parent company debt guarantee.
Citations: Item 21, Exhibit G, FDD Exhibit A (Maryland Addendum, Virginia Addendum, North Dakota Addendum)

High Franchisee Turnover

Low Risk

Explanation

This risk was not identified in the FDD package. High franchisee turnover, visible in FDD Item 20, can be a major red flag, potentially indicating systemic issues such as lack of profitability, poor franchisor support, or an unsustainable business model. It is a critical area for due diligence.

Potential Mitigations

  • An analysis of the franchise turnover tables in Item 20 with your accountant can help you calculate the true rate of unit churn.
  • Speaking with a significant number of former franchisees is a crucial due diligence step your business advisor can help facilitate.
  • Questioning the franchisor about the reasons for any reacquired or ceased outlets should be part of your discussion, with help from your attorney.
Citations: Not applicable

Rapid System Growth

Medium Risk

Explanation

FDD Item 20 shows steady franchise growth, including a 19% increase in franchised units in 2023. While growth can be positive, this pace, when combined with the financial weaknesses identified in Item 21 and various state addenda, presents a risk. The franchisor’s resources could be strained, potentially compromising its ability to provide adequate training and support to all new and existing franchisees.

Potential Mitigations

  • Discuss the franchisor's capacity to support its growth with your business advisor, focusing on their staffing and infrastructure.
  • It is important to ask current franchisees about the quality and responsiveness of the support they are currently receiving.
  • Your accountant should review the company's financial statements to assess if they are reinvesting sufficiently to support system expansion.
Citations: Item 20, Item 21

New/Unproven Franchise System

Low Risk

Explanation

This risk was not identified in the FDD package. The franchisor and its predecessor have been franchising for over two decades and have a substantial number of operating units. An unproven system would carry higher risks related to the viability of the business model, the effectiveness of operational procedures, and the adequacy of franchisor support.

Potential Mitigations

  • In any franchise opportunity, it is wise to have a business advisor help you assess the franchisor’s track record and the maturity of its systems.
  • Speaking with the earliest-signing franchisees can provide valuable insight into the system's evolution and the franchisor's learning curve.
  • An accountant's review of the financial statements can help gauge the stability that comes with a longer operating history.
Citations: Not applicable

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD package. The business operates in the well-established breakfast, brunch, and lunch restaurant segment. A fad-based business carries a significant risk that customer interest could decline rapidly, potentially leaving you with a long-term contractual obligation for a business with limited long-term demand.

Potential Mitigations

  • Working with a business advisor to research the long-term market trends for any industry is a critical due diligence step.
  • It is prudent to assess a franchisor's plans for product innovation and adaptation to stay relevant beyond current trends.
  • Your financial advisor can help evaluate a business model's resilience to economic shifts and changing consumer tastes.
Citations: Not applicable

Inexperienced Management

High Risk

Explanation

While the management team appears generally experienced, Item 4 discloses that the Chief Financial Officer, Casey Rees, was previously the Senior Vice President-Finance of Tijuana Flats Restaurants, LLC, which filed for Chapter 11 bankruptcy in April 2024. An executive's recent association with a bankrupt competitor, particularly in a key financial oversight role, may present a risk regarding management judgment and financial stewardship.

Potential Mitigations

  • You should discuss this disclosure with your attorney to understand its potential implications for the franchisor's management and financial oversight.
  • Inquire with the franchisor about the circumstances of the CFO's prior role and the strengths they believe he brings to the company.
  • A business advisor can help you evaluate the overall strength and depth of the entire executive team.
Citations: Item 2, Item 4

Private Equity Ownership

Medium Risk

Explanation

Item 1 discloses a multi-layered ownership structure involving holding companies (TBG ABEA Holdings, LLC), which is typical of private equity ownership. This can create a focus on short-term investor returns over the long-term health of the system. This risk is heightened by the disclosure in the financial statements (Note 9) that the franchisor guarantees a very large credit facility for its parent company.

Potential Mitigations

  • A business advisor can help you research the controlling private equity firm's reputation and track record with other franchise brands.
  • It is important to ask current franchisees about any changes in support, fees, or strategic direction since the current ownership took control.
  • The full implications of private equity ownership and the parent company debt should be discussed with your franchise attorney and accountant.
Citations: Item 1, Item 21, Exhibit G

Non-Disclosure of Parent Company

High Risk

Explanation

The franchisor guarantees a $45 million credit facility for its parent company, a contingent liability that is more than ten times the franchisor's total equity. Despite this massive financial entanglement, the financial statements for the parent company are not provided in the FDD. This lack of disclosure makes it impossible for you to assess the financial health of the parent and the likelihood that this guarantee could be called, which would jeopardize the franchisor's stability.

Potential Mitigations

  • Your accountant and attorney must be made aware of this significant risk and its potential impact on the franchisor's solvency.
  • You should request the parent company's financial statements to properly assess the risk associated with this guarantee.
  • Given the lack of disclosure, your financial advisor should help you model a worst-case scenario where this guarantee impacts the franchisor.
Citations: Item 1, Item 21, Exhibit G

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD package. The franchisor properly discloses its predecessor in Item 1, and Items 3 and 4 indicate no negative legal or bankruptcy history for that predecessor. In some cases, a franchisor might acquire a troubled system, and a lack of transparency about the predecessor's history could hide inherited problems.

Potential Mitigations

  • Your attorney should always carefully review the predecessor information in Items 1, 3, and 4.
  • When a system has been acquired, asking long-term franchisees about their experience under the prior ownership can provide valuable context.
  • A business advisor can help you research the history of a brand, including any predecessors, through public records and news archives.
Citations: Not applicable

Pattern of Litigation

Low Risk

Explanation

This risk was not identified in the FDD package, as Item 3 discloses no material litigation. A pattern of lawsuits, especially those initiated by franchisees alleging fraud or misrepresentation, is a significant warning sign about a franchisor's practices and the health of the franchise relationship.

Potential Mitigations

  • An experienced franchise attorney should always carefully review the nature, volume, and outcomes of any litigation disclosed in Item 3.
  • Independent legal research can sometimes uncover litigation not required to be disclosed, a task for which you might engage your attorney.
  • It is wise to ask current and former franchisees about any formal or informal disputes they are aware of within the system.
Citations: Not applicable
2

Disclosure & Representation Risks

Total: 15
2
2
11

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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3

Financial & Fee Risks

Total: 10
4
3
3

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.

4

Legal & Contract Risks

Total: 16
8
6
2

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.

5

Territory & Competition Risks

Total: 5
2
3
0

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.

6

Regulatory & Compliance Risks

Total: 10
5
1
4

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.

7

Franchisor Support Risks

Total: 4
2
2
0

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.

8

Operational Control Risks

Total: 12
3
7
2

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.

9

Term & Exit Risks

Total: 18
11
7
0

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.

10

Miscellaneous Risks

Total: 2
2
0
0

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.