International Food Creations
Initial Investment Range
$3,350 to $221,165
Franchise Fee
$5,000
The franchises offered are for food service counters offering sushi, Asian food and other food products to supermarkets and other venues.
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International Food Creations March 20, 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
International Food Creations, LLC (IFC) explicitly warns that its financial condition, as shown in Item 21, calls its ability to provide services and support into question. This direct admission of financial weakness is a significant risk. It suggests IFC may struggle to invest in the brand, provide promised support, or even maintain operations, potentially jeopardizing your investment and the viability of the entire system. Your success is tied to the franchisor's health.
Potential Mitigations
- A franchise accountant must conduct a deep analysis of the franchisor's financial statements, including all footnotes and cash flow trends.
- It is critical to ask your attorney about any state-mandated financial assurances, such as bonds or fee deferrals, that may be in place due to weak financials.
- Discussing how the franchisor's financial state might impact day-to-day support with current franchisees is a vital due diligence step.
High Franchisee Turnover
Medium Risk
Explanation
Item 20 data from 2023 shows a franchisee turnover rate of approximately 12%, with five units ceasing operations (two non-renewals and three closures) out of a starting base of 41. While the 2024 rate was lower, this earlier churn in a very young system could indicate potential issues with the business model's profitability or franchisee satisfaction. High turnover can be a leading indicator of systemic problems that you should investigate further.
Potential Mitigations
- Your business advisor should help you analyze the turnover data across all years to identify any negative trends.
- Contacting former franchisees listed in the FDD to understand their reasons for leaving is a critical due diligence task.
- An accountant can help you model the potential financial impact if the factors causing this turnover affect your own unit.
Rapid System Growth
High Risk
Explanation
The system has grown from 6 to 76 franchised outlets in just three years. This extremely rapid expansion, especially when combined with the franchisor's disclosed financial weakness and limited operating history, presents a significant risk. The franchisor's support systems, supply chain, and management infrastructure may be strained and unable to keep pace, potentially leading to inadequate training, quality control issues, and poor operational support for you despite the fees you pay.
Potential Mitigations
- Engaging a business advisor to question the franchisor about their specific plans to scale support infrastructure is highly recommended.
- It is wise to ask a broad range of existing franchisees about the current quality and responsiveness of franchisor support.
- Your accountant should review the financial statements to assess if IFC has the capital to sustain its support obligations during this growth.
New/Unproven Franchise System
High Risk
Explanation
IFC was formed in August 2020 and began franchising in December 2020, giving it a very short operating history. The FDD explicitly highlights this as a special risk. Investing in a new, unproven system carries higher risk, as its business model, support structures, and brand recognition are not yet well-established. The long-term viability and profitability of the franchise are less certain compared to a mature system with a lengthy track record of success.
Potential Mitigations
- A business advisor can help you conduct extensive due diligence on the long-term sustainability of the business model.
- It is vital to speak with the earliest-joining franchisees to understand the evolution of the system and the franchisor's performance.
- Your franchise attorney may be able to negotiate more favorable terms, such as enhanced support or lower fees, to help offset the higher risk.
Possible Fad Business
Low Risk
Explanation
The business model of operating sushi counters within supermarkets is well-established and has demonstrated long-term consumer demand. This concept does not appear to be based on a new or fleeting trend, so the risk of it being a short-lived fad is low. However, local market tastes can still change over time.
Potential Mitigations
- A business advisor can help you assess the long-term consumer demand for this type of food service in your specific local market.
- Reviewing the franchisor's plans for menu innovation and concept evolution is a good practice to ensure long-term relevance.
- An accountant can help you evaluate the business model's resilience to economic shifts and changing consumer spending habits.
Inexperienced Management
Medium Risk
Explanation
While IFC's key executives have experience in the food and beverage industry, their experience specifically as franchisors is very limited, beginning only in 2020. This lack of a long franchising track record means the systems for support, training, and supply chain management may be underdeveloped. Inexperienced franchisors can sometimes make strategic errors that negatively impact franchisees, creating a higher level of operational risk for you.
Potential Mitigations
- A thorough review of management's specific franchising experience with your business advisor is recommended.
- Speaking with existing franchisees about the quality of management's support and strategic direction is essential.
- Your attorney can help you inquire whether the franchisor has engaged experienced outside franchise consultants to guide their development.
Private Equity Ownership
Low Risk
Explanation
The FDD does not indicate that the franchisor is owned or controlled by a private equity firm. Therefore, the specific risks often associated with PE ownership, such as a focus on short-term returns over long-term system health, do not appear to be present in this FDD.
Potential Mitigations
- As a general practice, it is wise for your attorney to confirm the ownership structure of the franchisor entity.
- Your business advisor can help research the background of the principal owners to understand their business philosophy.
- Even without PE ownership, understanding the franchisor's long-term goals for the system is a key part of due diligence.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. IFC is presented as the primary entity, and there is no mention of a parent company that guarantees its obligations or controls its operations. Therefore, the analysis can focus on the disclosed entity's information.
Potential Mitigations
- Your attorney can perform a corporate search to confirm that there is no undisclosed parent entity with a controlling interest.
- Asking the franchisor directly about any affiliated companies that provide key services is a useful due diligence step.
- An accountant should focus their analysis on the financial statements of the disclosed franchisor entity.
Predecessor History Issues
Low Risk
Explanation
Item 1 of the FDD states that IFC has no predecessor. This means the company's history as disclosed is its complete history, and there are no previous entities whose operational track record, litigation, or bankruptcy history would need to be considered. This simplifies the due diligence process regarding corporate history.
Potential Mitigations
- Your attorney can verify the franchisor's corporate history to confirm the absence of any undisclosed predecessor entities.
- The focus of due diligence should be on the current entity's short operating history, as discussed with your business advisor.
- An accountant should analyze the financial statements of the current entity since its inception to understand its performance.
Pattern of Litigation
Low Risk
Explanation
Item 3 of the FDD states that no litigation is required to be disclosed. This indicates that the franchisor has not been involved in legal disputes that meet the specific criteria for disclosure under franchise law, which is a positive sign. However, this does not mean no disputes have ever occurred.
Potential Mitigations
- Your attorney can conduct public record searches to see if any non-disclosable litigation exists that might still be relevant.
- Asking current and former franchisees about their experiences with disputes is a critical part of due diligence.
- Understanding the dispute resolution process outlined in the Franchise Agreement is important, a task for your attorney.
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
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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
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
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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
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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