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Barberitos

Barberitos Franchising Co., LLC
https://barberitosfranchising.com
1-727-201-2648
3135 1st Avenue N., Suite 15459, St. Petersburg, FL 33733

Initial Investment Range

$521,000 to $900,360

Franchise Fee

$35,000 to $36,000

As a franchisee, you will operate a BARBERITOS restaurant featuring Southwestern cuisine specializing in burritos, quesadillas, nachos, tacos, salads, cold beverages and other ancillary products for lunch, dinner, catering and take-home.

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Barberitos January 29, 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
2
2
6

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The FDD itself flags the franchisor's financial condition as a special risk, questioning its ability to support you. Audited financial statements for the parent company, WOWorks, confirm this concern, showing a net loss of over $3.1 million in 2024 and a member's deficit (negative equity) of over $924,000. This financial instability could significantly impact the franchisor's capacity to provide promised services, support, and invest in the brand's growth.

Potential Mitigations

  • An experienced franchise accountant must thoroughly review the parent company's financial statements, including all footnotes and cash flow statements.
  • Discuss the franchisor's plan to achieve profitability and fund its obligations with your business advisor before investing.
  • Your attorney should evaluate the strength and enforceability of the parent company's performance guarantee.
Citations: Item 21, FDD page iv, Exhibit F

High Franchisee Turnover

Medium Risk

Explanation

Item 20 data shows a notable level of ownership changes. Over the last three years, the system has seen a total of 6 franchisees exit through termination, non-renewal, or cessation of operations. Additionally, 11 franchises were transferred to new owners during that same period. While some turnover is normal, this level of combined exits and transfers for a system of this size may indicate underlying issues with franchisee profitability or satisfaction that warrant further investigation.

Potential Mitigations

  • Speaking with a significant number of former franchisees listed in Exhibit D is crucial to understand their reasons for leaving.
  • Your business advisor should help you analyze the turnover and transfer rates against industry benchmarks for similar brands.
  • A frank discussion with the franchisor about the reasons for these terminations and transfers is warranted before you proceed.
Citations: Item 20

Rapid System Growth

Low Risk

Explanation

This risk was not identified. The franchise system has not experienced rapid growth in recent years; in fact, the total number of outlets has slightly decreased according to Item 20 data. While this avoids the risks associated with over-expansion, it's important to understand the reasons for the lack of growth.

Potential Mitigations

  • A discussion with your business advisor can help you assess the franchise's market position and growth potential.
  • It is important to ask the franchisor about their strategic plans for future system growth and brand development.
  • Your attorney should review any development agreements to understand growth obligations if you plan to open multiple units.
Citations: Not applicable

New/Unproven Franchise System

High Risk

Explanation

The FDD's "Special Risks" section explicitly states that the franchisor, Barberitos Franchising Co., LLC (Barberitos LLC), is at an early stage of development with a limited operating history. While the brand has existed since 2002 under a predecessor, the current franchising entity is new (formed in 2022). This newness introduces risks related to the management team's ability to effectively support the franchise system, which could differ from the support provided by the original founder.

Potential Mitigations

  • Conducting extensive due diligence on the new management team's experience in both the restaurant industry and in franchising is critical.
  • It is prudent to speak with franchisees who have operated under both the new and old ownership to understand changes in support.
  • Your accountant should analyze if the new entity has sufficient capital to support its growth and operational plans.
Citations: Item 1, FDD page iv

Possible Fad Business

Low Risk

Explanation

This risk was not identified. The business concept, a Southwestern-style grille, is part of a well-established and mature segment of the fast-casual restaurant industry. The concept is not based on a new or fleeting trend, reducing the risk that consumer interest might decline rapidly.

Potential Mitigations

  • Your business advisor can help you analyze the long-term consumer demand and competitive landscape for Southwestern-style restaurants in your target market.
  • You should review the franchisor's plans for menu innovation and brand evolution to ensure it remains competitive.
  • An analysis of local competition with your real estate professional will help determine market saturation.
Citations: Not applicable

Inexperienced Management

Low Risk

Explanation

This risk was not identified. The executive team detailed in Item 2 has extensive prior experience with other established national and regional franchise brands. This depth of franchising experience in leadership suggests the management team has the background needed to operate and support a franchise system, even though the current franchisor entity is relatively new.

Potential Mitigations

  • It is still a good practice to research the professional backgrounds of the key executives listed in Item 2.
  • Asking current franchisees about their direct experiences with the management team's support and strategic direction is advisable.
  • A business advisor can help you evaluate how the team's past experience applies to this specific brand.
Citations: Not applicable

Private Equity Ownership

Medium Risk

Explanation

The franchisor is part of a larger holding company, WOWorks, which operates multiple franchise brands. This structure is often associated with private equity or investment-firm ownership. Furthermore, the 2023 financial statement footnotes indicate that the parent company is actively seeking a new owner. This could lead to a sale of the system, potentially resulting in changes to leadership, strategic direction, and support levels, which may or may not be favorable to you.

Potential Mitigations

  • Your business advisor should help you research the track record of the parent company, WOWorks, with its other franchise systems.
  • Discussing any potential sale and its implications for franchisees with the franchisor is an important step.
  • Your attorney should review the assignment clause in the Franchise Agreement to understand your rights if the system is sold.
Citations: Item 1, Exhibit F

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified. The FDD clearly discloses the parent company structure in Item 1 and provides audited financial statements for the parent, WOWorks, in Item 21. A guarantee of performance from the parent company is also included, providing transparency into the financial backing of the franchisor.

Potential Mitigations

  • It is wise for your accountant to review the parent company's financials to assess its ability to support the franchisor.
  • Your attorney should examine the enforceability and terms of the parent company's guarantee.
  • Understanding the relationship and flow of funds between the franchisor and its parent is a good topic for discussion with your financial advisor.
Citations: Not applicable

Predecessor History Issues

Low Risk

Explanation

This risk was not identified. While the FDD discloses a predecessor entity in Item 1, there is no negative history such as litigation or bankruptcy reported for that predecessor in Items 3 and 4. The information provided appears to be in compliance with disclosure requirements.

Potential Mitigations

  • It is good practice to ask long-tenured franchisees about their experience operating under the predecessor entity.
  • A business advisor can help you research public information about the predecessor for additional context.
  • Your attorney can confirm that the disclosures regarding the predecessor appear complete as required by law.
Citations: Not applicable

Pattern of Litigation

Low Risk

Explanation

This risk was not identified. Item 3 of the FDD states that there is no litigation that requires disclosure. This indicates a clean legal history regarding franchisee disputes or other material lawsuits against the franchisor and its management, which is a positive sign.

Potential Mitigations

  • Independent online searches for litigation involving the franchisor or its parent, WOWorks, can be a prudent step, which your attorney can assist with.
  • Discussing the franchisor's dispute resolution philosophy with current and former franchisees is still valuable.
  • Your attorney should still review the dispute resolution clauses in the Franchise Agreement to understand the process if a conflict were to arise.
Citations: Not applicable
2

Disclosure & Representation Risks

Total: 15
3
5
7

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
6
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

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4

Legal & Contract Risks

Total: 16
6
7
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.

5

Territory & Competition Risks

Total: 5
2
2
1

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
4
1

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
6
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.

9

Term & Exit Risks

Total: 18
8
8
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.

10

Miscellaneous Risks

Total: 1
1
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.