Crave
Initial Investment Range
$237,500 to $1,108,500
Franchise Fee
$32,500 to $85,000
The franchise offered is for a quick serve “Crave” restaurant or food truck offering hot dogs, other cased meats, barbeque items, beverages, appetizers, and side dishes.
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Crave March 26, 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’s audited financial statements show significant financial weakness. Crave Franchising, LLC (Crave) has a growing negative net worth (equity deficit) of ($687,021) as of year-end 2024, with total liabilities far exceeding total assets. The company also reported a net loss for 2024. Several state addenda require Crave to defer your initial fees due to its financial condition, signaling regulators' concerns about its ability to provide support and meet its obligations, which presents a significant risk to your investment.
Potential Mitigations
- A franchise accountant should thoroughly analyze the franchisor's financial statements, including the increasing deficit and negative cash flow trends, to assess long-term viability.
- Discuss the implications of the state-mandated fee deferrals with your franchise attorney to understand the protections they may or may not offer.
- It is crucial for your business advisor to help you evaluate if the franchisor has sufficient capital to support its system without relying on new franchise sales.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a high rate of franchisee churn. In 2023 and 2024, the franchise system experienced churn rates approaching 30% when accounting for terminations and units that ceased operations. A significant number of franchisees left the system in the last two years, particularly under the category of 'Ceased Operations - Other Reasons,' which can be a red flag for systemic issues, franchisee dissatisfaction, or lack of profitability. This level of turnover is a strong indicator of potential risk.
Potential Mitigations
- It is critical to contact a significant number of former franchisees listed in Exhibit D to understand their reasons for leaving the system.
- Your business advisor should help you analyze the turnover trends over the past three years and discuss the potential underlying causes with the franchisor.
- An accountant should assist you in creating financial models that account for the high risk of failure indicated by these turnover numbers.
Rapid System Growth
High Risk
Explanation
Item 20 tables show the system grew rapidly, from 17 to 24 outlets in 2023, while Item 21 financial statements indicate a significant negative net worth. Rapid expansion combined with financial weakness can strain a franchisor's ability to provide adequate site selection guidance, training, and ongoing operational support to all its new franchisees. This situation creates a risk that support resources will be stretched too thin, potentially impacting your business's ramp-up and long-term success.
Potential Mitigations
- Your business advisor should help you question the franchisor about their specific plans and infrastructure for supporting this rapid growth.
- Interview a cross-section of both new and established franchisees to gauge their current satisfaction with the quality and timeliness of franchisor support.
- Have your accountant review the franchisor's financials to independently assess if they have the capital to sustain support infrastructure alongside unit growth.
New/Unproven Franchise System
High Risk
Explanation
While the franchisor, Crave, was formed in 2018 and has several years of operating history, the system is still relatively young and experiencing rapid growth alongside high turnover and financial weakness. This combination presents risks similar to a new system, including the potential for underdeveloped support structures and an unproven long-term model. The significant number of unopened franchises noted in Item 20 further highlights potential challenges in the development pipeline, which can be characteristic of a newer, rapidly expanding system.
Potential Mitigations
- Engage a business advisor to thoroughly investigate the operational track record and the sustainability of the business model beyond its initial growth phase.
- Speaking with the earliest-opening franchisees listed in Item 20 is critical to understand the evolution of the system and its support.
- Your accountant should scrutinize the franchisor's reliance on franchise fees versus ongoing royalties for its revenue.
Possible Fad Business
Medium Risk
Explanation
The business model, centered on specialty hot dogs, barbecue, and optional axe-throwing, caters to specific consumer interests. While these concepts are popular, there is a risk they could be tied to trends that may evolve or fade over time. A prospective franchisee should consider the long-term, sustainable demand for this specific combination of offerings in their local market beyond current popularity, as you will be bound by a long-term agreement regardless of shifts in consumer preference.
Potential Mitigations
- A business advisor can help you conduct independent market research to assess the long-term consumer demand for this specific concept in your area.
- Discuss the franchisor's strategy for innovation, menu development, and adaptation to changing consumer tastes with their management team.
- Creating a business plan with your financial advisor that includes contingency scenarios for shifts in market trends is a prudent step.
Inexperienced Management
Low Risk
Explanation
The business experience of the management team listed in Item 2 appears relevant to the restaurant and franchise industry. This specific risk was not identified as a primary concern in the FDD package. However, it is always important for a franchisee to be comfortable with the leadership team's background and vision, as they will be guiding the brand and providing support for the duration of your agreement.
Potential Mitigations
- A business advisor can assist you in researching the professional backgrounds and track records of the key executives mentioned in Item 2.
- It is beneficial to ask current franchisees about their direct experiences and the quality of support they receive from the management team.
- When you meet the franchisor, prepare questions about their long-term vision and strategy for the brand.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package, as there is no disclosure in Item 1 indicating that Crave is owned by a private equity firm. The company appears to be privately held by its founders. Private equity ownership can introduce risks related to short-term profit motives, which may not always align with the long-term health of franchisees. While not applicable here, it is a key structural point to check in any FDD.
Potential Mitigations
- Your attorney should always confirm the ownership structure detailed in Item 1 of the FDD to identify any controlling entities.
- If a franchisor is owned by a private equity firm, it is advisable to have a business advisor help you research the firm’s history with other franchise brands.
- A discussion with your financial advisor can help you understand the potential impacts of different ownership structures on a franchise system.
Non-Disclosure of Parent Company
Medium Risk
Explanation
Item 1 discloses a parent company, Rincione Investments LLC, and an affiliate, Crave WM Franchising LLC. The parent company does not guarantee Crave's performance. Crave itself has a significant negative net worth. While the parent is disclosed, its financial statements are not provided, meaning the full financial picture of the ultimate ownership structure is not available for review. This limits your ability to assess the overall financial strength backing the franchise system.
Potential Mitigations
- Your accountant should assess the risk posed by the franchisor's weak financials in the context of a non-guarantor parent company.
- Discuss with your attorney the legal separation between these entities and what recourse, if any, you might have against the parent or affiliate.
- Inquire with the franchisor about the financial health of the parent company, understanding they are not obligated to disclose it.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 states clearly that the franchisor has no predecessor. Therefore, there is no hidden history of prior business failures, litigation, or high franchisee turnover under a different corporate name for this specific system. Understanding a system's lineage is important because a successor franchisor inherits the assets and sometimes the problems of a prior company.
Potential Mitigations
- It is good practice to have your attorney verify the
Pattern of Litigation
High Risk
Explanation
Item 3 discloses three pending lawsuits filed by franchisees against Crave and its principals in 2023 and 2024. The allegations are very serious and include fraudulent misrepresentation, silent fraud, and violations of state and federal franchise laws. This pattern of litigation from multiple franchisees alleging similar claims of misrepresentation is a significant red flag. It suggests potential systemic issues in the franchise sales process or a high level of franchisee dissatisfaction with the franchisor's performance versus its promises.
Potential Mitigations
- Your franchise attorney must carefully review the details of these lawsuits and explain the potential implications.
- It is highly advisable to have your attorney help you contact franchisees involved in these lawsuits to understand their perspective, if they are able to speak.
- A business advisor can help you weigh the severe risk indicated by this pattern of litigation against any potential benefits of the franchise.
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
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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