Frutta Bowls
Initial Investment Range
$387,500 to $702,500
Franchise Fee
$35,000 to $36,000
As a franchisee, you will operate a Frutta Bowls restaurant featuring acai bowls, pitaya bowls, kale bowls, fruit smoothies, and other health-centric snacks, for dine-in, carry-out, catering and delivery.
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Frutta Bowls 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.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The franchisor highlights its own financial condition as a special risk. The parent company, which guarantees performance, reported a net loss of over $3.1 million in FY2024 and negative member's equity of ($924,730) in its audited financials. Its predecessor filed for bankruptcy. This financial weakness could impair the franchisor's ability to provide support, invest in the brand, or meet its obligations to you, creating significant risk for your investment.
Potential Mitigations
- A thorough review of the parent company's financial statements with your accountant is critical to understand the potential impact of these losses on system support.
- Engaging a business advisor can help you develop contingency plans should the franchisor's financial condition worsen or affect its performance.
- Your attorney should examine the terms of the parent company's performance guarantee to understand its scope and enforceability.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a very high rate of franchisee exits. In fiscal year 2024, six franchised outlets (representing over 22% of the starting total) were terminated, not renewed, or ceased operations. Over the past three years, the total number of franchised units has declined by more than 26%. This level of turnover is a strong indicator of potential systemic problems, such as issues with profitability, franchisee dissatisfaction, or inadequate support.
Potential Mitigations
- You should contact a significant number of former franchisees listed in Item 20 to understand why they left the system.
- A business advisor can help you analyze the turnover data against industry benchmarks to gauge the severity of the situation.
- Discuss the specific reasons for this high turnover rate with the franchisor and ask for their plan to improve franchisee retention.
Rapid System Growth
Low Risk
Explanation
This risk was not identified in the FDD package. The data in Item 20 indicates the franchise system has been contracting, not growing rapidly. A shrinking system can present its own challenges, such as declining brand presence and potential concerns about long-term viability. However, the specific risks associated with a franchisor's support systems being overwhelmed by rapid expansion do not appear to be present here.
Potential Mitigations
- Your business advisor can help assess whether the rate of system contraction poses a risk to brand recognition in your market.
- In discussions with the franchisor, it's wise to ask about their strategy for stabilizing and growing the system in the future.
- Your attorney can review the agreement for any protections in the event the franchisor's system size declines significantly.
New/Unproven Franchise System
Medium Risk
Explanation
The current franchisor, SW-Frutta Bowls Franchising Co., LLC (Frutta Bowls LLC), was formed in December 2020 after acquiring the assets of its predecessor, which had filed for Chapter 11 bankruptcy. While the brand concept has existed since 2017, the current ownership and management structure is relatively new and took control of a troubled system. This combination of recent formation and inheriting a bankrupt brand presents a higher level of risk than a long-established, stable franchise system.
Potential Mitigations
- A thorough review of the management team's prior experience in franchising, as detailed in Item 2, should be conducted with your business advisor.
- It is important to ask current franchisees about any changes in support, operations, and culture since the new ownership took over.
- Your accountant can help assess the financial stability and capitalization of the new entity since its formation.
Possible Fad Business
Medium Risk
Explanation
The business focuses on a health-centric menu of acai bowls, smoothies, and similar snacks. While currently popular, concepts that are narrowly tied to specific food trends can face risks if consumer preferences shift over the long term. A prospective franchisee should consider the potential for the concept's peak popularity to wane and assess its long-term viability and ability to adapt, as your franchise agreement will likely outlast the peak of any specific trend.
Potential Mitigations
- With a business advisor, research the long-term market trends for health-centric, fast-casual concepts beyond the current popularity of acai bowls.
- Inquire with the franchisor about their long-term vision, research and development plans, and strategy for menu evolution to stay relevant.
- During franchisee calls, ask how reliant their sales are on a single product category and their thoughts on the brand's adaptability.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD package. Item 2 of the FDD indicates that the key executives of the franchisor have significant prior experience in managing other, larger franchise systems such as Schlotzsky's and Rita's Franchise Company. This suggests that while the Frutta Bowls entity itself is relatively new, the leadership team possesses a background in franchise operations and management, which can be a positive factor for system support and strategy.
Potential Mitigations
- A business advisor can help you further investigate the specific roles and successes of the management team at their prior companies.
- It is still beneficial to ask current franchisees about their direct experiences and the quality of support received from this specific management team.
- Your attorney can confirm that there are no undisclosed principals with less experience who may have significant influence.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package. While the ultimate parent is identified as CLP Dining, LLC, the disclosure documents do not explicitly state that the franchisor is owned or controlled by a private equity firm in the typical sense. Therefore, the specific risks commonly associated with a PE firm's investment timeline and management style are not directly applicable based on the information provided.
Potential Mitigations
- Your business advisor can help research the parent companies, WOWorks and CLP Dining, LLC, to better understand their business model and investment strategy.
- You should ask the franchisor about the long-term goals of the ownership group to gauge their commitment to the brand's health.
- It is prudent to have your attorney review the assignment clause in the Franchise Agreement to understand who the franchisor can sell the system to.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. FDD Item 1 discloses the parent company, Restaurant Co., LLC dba WOWorks, and its parent, CLP Dining, LLC. Furthermore, the audited financial statements for the parent, WOWorks, which also acts as the guarantor of the franchisor's performance, are included as Exhibit F. This level of disclosure appears to meet regulatory requirements and provides transparency into the financial health of the entity backing the franchisor's obligations.
Potential Mitigations
- Having your accountant review the provided parent company financial statements is a crucial step in your due diligence.
- An attorney should confirm that the provided guarantee from the parent company is legally sound and properly executed.
- You can still ask the franchisor to clarify the relationship between all affiliated entities to ensure a complete understanding.
Predecessor History Issues
High Risk
Explanation
The franchisor's predecessor, Frutta Bowls Franchising, L.L.C., has a significant and troubled history. Item 4 discloses that the predecessor filed for Chapter 11 bankruptcy. Item 3 further reveals the predecessor was subject to regulatory actions in New York and Maryland for selling franchises without being properly registered. This history suggests a prior operational and compliance culture that could present risks, even under new ownership.
Potential Mitigations
- Your attorney should carefully analyze the details of the bankruptcy and regulatory actions to understand their root causes.
- It is vital to ask current franchisees who operated under the predecessor about their experience and the changes under the new franchisor.
- A business advisor can help you assess what steps the new management has taken to rectify the issues that plagued the predecessor.
Pattern of Litigation
Medium Risk
Explanation
A pattern of regulatory actions exists with the franchisor's predecessor. Item 3 discloses that the predecessor, Frutta Bowls Franchising, L.L.C., entered into consent orders or assurances with state regulators in both New York and Maryland for engaging in the sale of franchises while not effectively registered. While the current franchisor has no disclosed litigation, this history of regulatory non-compliance in the same franchise system is a significant concern that you should be aware of.
Potential Mitigations
- An attorney should review the specific details of the concluded litigation in Item 3 to understand the nature of the past violations.
- You should ask the franchisor what measures have been implemented to ensure compliance with all state and federal franchise laws going forward.
- Contacting franchisees in the affected states, if possible, could provide insight into how these issues were resolved at the unit level.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Purchase the complete risk review to see all 102 risks across all 10 categories.
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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