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How much does Atomic Wings cost?
Initial Investment Range
$222,220 to $910,773
Franchise Fee
$25,000 to $75,000
The franchise offered is for a fast-casual restaurant operating under the name “Atomic Wings” featuring Buffalo-style chicken wings that are Halal and are hormone and antibiotic free.
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Atomic Wings April 29, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: August 21, 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 FDD explicitly warns of the franchisor's weak financial condition and past "going concern" doubts from auditors. Financials show negative equity in 2023 and early 2025, plus a history of losses. State regulators imposed financial assurances, like deferring initial fees, due to this instability. This may impact Atomic Wings Franchisor Inc.'s (Atomic Wings) ability to provide support, grow the brand, or even remain in business, posing a significant risk to your investment.
Potential Mitigations
- An experienced franchise accountant must perform a detailed analysis of the financial statements, including footnotes and cash flow, to assess viability.
- Your attorney should review the terms of any state-mandated financial assurances to understand the protections they offer.
- Discuss the franchisor's plans for achieving sustained profitability and financial stability with your business advisor.
High Franchisee Turnover
High Risk
Explanation
The data in Item 20 reveals high franchisee turnover. In 2023 and 2024, the percentage of franchisees who terminated, ceased operations, or were not renewed was approximately 20% and 17%, respectively. These figures are concerning and could suggest potential issues with franchisee profitability, satisfaction, or the overall business model. High turnover presents a significant risk to the long-term stability and value of the franchise system you are considering joining.
Potential Mitigations
- It is crucial to contact a significant number of the former franchisees listed in Item 20 to understand why they left the system.
- Your accountant should help you analyze the turnover data against industry benchmarks to gauge its severity.
- A business advisor can help assess if the reasons for turnover represent systemic flaws or isolated incidents.
Rapid System Growth
High Risk
Explanation
The franchisor projects opening 21 new units in the next fiscal year, which would more than double the system's size. This aggressive expansion, combined with the company's disclosed financial weakness and high franchisee turnover, suggests a significant risk that support systems like training, site selection, and operational assistance may become severely strained. Inadequate support from Atomic Wings could negatively impact your business performance and long-term success.
Potential Mitigations
- Engaging a business advisor to assess the franchisor's infrastructure and capacity to support this planned growth is highly recommended.
- Your attorney can help you question the franchisor about their specific plans to scale support services for a much larger system.
- Speaking with both new and established franchisees is vital to gauge the current quality and responsiveness of franchisor support.
New/Unproven Franchise System
High Risk
Explanation
Although the franchisor has operated since 2006, the franchise system shows signs that it may not be a stable business model. The combination of weak financials, high franchisee turnover, and aggressive growth plans suggests significant operational risks. You would be investing in a system that appears to still be working through fundamental challenges, which could impact brand strength, support quality, and your potential for success.
Potential Mitigations
- Conduct extensive due diligence with a business advisor to evaluate the sustainability of the business model.
- It is imperative to speak with a wide range of current and former franchisees to understand the system's operational realities.
- An accountant's review of the financial trends over several years is crucial to assess if the business is stabilizing.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD Package. The core offering, Buffalo-style chicken wings, is a well-established and enduring segment of the fast-casual restaurant industry rather than a new or fleeting trend. However, you should always consider how a specific brand differentiates itself in a competitive market, as consumer preferences can shift even within established categories, impacting long-term viability.
Potential Mitigations
- A business advisor can help you analyze the local competitive landscape and the brand's unique selling propositions.
- To prepare for market shifts, it's wise to work with an accountant to create financial models that account for potential fluctuations in demand.
Inexperienced Management
Low Risk
Explanation
This risk was not identified. The key executives listed in Item 2 appear to have relevant experience in the restaurant industry and in franchising, both as franchisors and franchisees with other established brands. Assessing management's capabilities is crucial, as their expertise directly impacts the quality of support, training, and strategic direction provided to you.
Potential Mitigations
- When speaking with current and former franchisees, it is useful to ask about their direct experiences with the management team's competence and accessibility.
- A business advisor can help you research the professional reputations of the key executives.
Private Equity Ownership
Low Risk
Explanation
The FDD does not indicate that the franchisor is owned by a private equity firm. This type of ownership can be a risk because PE firms often have a shorter-term investment horizon, which may lead to decisions prioritizing investor returns over the long-term health of franchisees. Understanding the ownership structure and motivations of a franchisor is an important part of due diligence.
Potential Mitigations
- Your attorney should always confirm the ownership structure disclosed in Item 1 and investigate any parent companies.
- Speaking with a business advisor can help you understand the potential implications of different ownership structures on a franchise system.
Non-Disclosure of Parent Company
Low Risk
Explanation
The franchisor explicitly states in Item 1 that it has no parent company. When a franchisor is a subsidiary, the financial health and influence of the parent company can be a material fact. The absence of a parent company simplifies the corporate structure, but also means the franchisor must stand on its own financially, making a thorough review of its statements even more critical.
Potential Mitigations
- An accountant's review of the franchisor's financial statements (Item 21) is essential to confirm its standalone viability.
- Your attorney can help verify the corporate structure disclosed in Item 1.
Predecessor History Issues
Low Risk
Explanation
This risk is not present as the franchisor discloses in Item 1 that it has no predecessors. A predecessor is a company from which the franchisor acquired the business, and its history can be important. Understanding the complete history of a brand, including any past bankruptcies, litigation, or high turnover under previous owners, is a key part of due diligence.
Potential Mitigations
- Your attorney can help you verify the franchisor's stated history and investigate public records for information on the brand's origins.
- A business advisor can assist in researching the brand's reputation and track record in the marketplace.
Pattern of Litigation
Low Risk
Explanation
The FDD states in Item 3 that there is no litigation that requires disclosure. A pattern of lawsuits, particularly those initiated by franchisees alleging fraud or misrepresentation, can be a significant red flag about a franchisor's practices. The absence of such litigation is a positive sign, but does not eliminate the need for thorough due diligence on other aspects of the business.
Potential Mitigations
- It is still prudent to ask current and former franchisees about any disputes they may have had, even if they did not result in litigation.
- An attorney can conduct independent searches of court records for any litigation involving the franchisor or its principals.
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
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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
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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
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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
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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