Grabbagreen
Initial Investment Range
$225,500 to $626,575
Franchise Fee
$9,000 to $52,500
We offer a franchise to own and operate quick service restaurants offering healthy food, juice, smoothies and related products under the “Grabbagreen” name and marks.
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Grabbagreen March 28, 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 2024 consolidated financial statements for MTY Franchising USA, Inc. (MTY USA) show a net loss of over $12.5 million, compared to a net income of nearly $17 million in 2023. This loss was driven by significant impairment charges of over $44 million on intangible assets and goodwill. Such figures may indicate financial stress within the parent's portfolio of brands and raise questions about the long-term value and stability of the Grabbagreen system.
Potential Mitigations
- A franchise-experienced accountant should meticulously analyze the audited financial statements, including all footnotes and the auditor's report, to assess the franchisor's financial health.
- Discuss the potential impact of the parent company's financial performance and impairment charges on its ability to support your specific brand with a financial advisor.
- Your attorney should inquire about any financial assurance measures, like bonds or escrow, that may be required by state regulators due to the financial performance.
High Franchisee Turnover
High Risk
Explanation
The data in Item 20 tables shows a catastrophic decline in the number of franchised Grabbagreen outlets. The system shrank from 13 units at the start of 2022 to just 4 units by the end of 2023, a 69% reduction. Ten units ceased operations or were terminated in a two-year period. This extremely high rate of franchisee exit is a critical red flag, strongly suggesting systemic problems with the business model's profitability, franchisee satisfaction, or franchisor support.
Potential Mitigations
- It is imperative to contact a significant number of the former franchisees listed in Item 20 to understand the reasons for this high turnover rate.
- Your business advisor should help you question the franchisor directly about the causes of this dramatic system decline.
- Given the high turnover, your accountant must create extremely conservative financial projections, as the data suggests a high risk of failure.
Rapid System Growth
Low Risk
Explanation
This risk was not identified in the FDD package. The data in Item 20 indicates the system is shrinking dramatically, not undergoing rapid growth. Rapid growth can be a risk because a franchisor's support systems may not keep pace with the needs of a quickly expanding franchisee base, potentially leading to inadequate training, site selection assistance, and ongoing operational support for new units.
Potential Mitigations
- During due diligence, it's wise to ask a franchisor about their controlled growth strategy with your business advisor.
- Evaluating the ratio of corporate support staff to the number of franchisees can provide insight into the franchisor's ability to manage growth, a task for your accountant.
- Your attorney can review the franchisor's obligations for support in the Franchise Agreement to see if they are scalable.
New/Unproven Franchise System
Medium Risk
Explanation
Grabbagreen has been franchising since 2015 and was acquired by MTY USA in 2018. However, the system has shrunk to only four operating franchised units. This extremely small size means the concept's viability as a widespread, successful franchise is currently unproven. You would be one of a very small number of operators, which carries risks related to brand recognition, peer support, and the franchisor's long-term commitment to a micro-brand within its massive portfolio.
Potential Mitigations
- A business advisor can help you assess the risks and potential rewards of joining a 'turnaround' brand with very few existing operators.
- Speaking with all four of the remaining franchisees is critical to understand their performance and their view of the system's future.
- Your attorney should investigate if the franchisor has specific plans and dedicated resources for growing this particular brand.
Possible Fad Business
Medium Risk
Explanation
The healthy food and smoothie concept is in a highly competitive market. While the category itself may have staying power, the dramatic decline in Grabbagreen units from 13 to 4 in two years suggests this specific brand's business model may have been a fad or has failed to compete effectively. The risk is that consumer interest in this particular brand has waned, making future profitability difficult to achieve even if the broader market remains.
Potential Mitigations
- A business advisor should help you conduct independent market research to determine if the Grabbagreen concept can still compete against current local and national competitors.
- Question the franchisor on their strategy to innovate and differentiate the brand to ensure its long-term relevance.
- With a financial advisor, create financial models that account for intense competition and the brand's reduced market presence.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD package. The executive team detailed in Item 2, drawn from MTY USA and its large subsidiary Kahala Brands, possesses extensive experience in managing and operating numerous franchise systems across the restaurant industry. A lack of management experience is not a primary concern here; rather, the risk may be a lack of focus on this specific small brand.
Potential Mitigations
- It is still prudent to research the specific individuals who would be your primary contacts to understand their direct experience with your type of concept.
- Your business advisor can help you formulate questions for the franchisor about the specific management team and resources dedicated to supporting the Grabbagreen brand.
- Confirming the track record of the parent company's management with other acquired brands can be a useful step for your attorney during due diligence.
Private Equity Ownership
High Risk
Explanation
MTY USA is part of MTY Food Group, a publicly traded company that has grown primarily through acquiring other franchise systems. This corporate strategy, similar to a private equity firm's model, can create risks. Decisions may prioritize overall corporate financial targets or the needs of larger, more profitable brands over the long-term health of a small system like Grabbagreen. Support and resources could be diverted, and the system could be sold again without your consent.
Potential Mitigations
- A business advisor can help you research MTY Food Group's history of managing small, acquired brands to see if there is a pattern of neglect or successful revitalization.
- In discussions with current franchisees, ask about the level of focus and resources MTY USA dedicates specifically to the Grabbagreen brand.
- Your attorney should review the assignment clause in the Franchise Agreement to understand your rights if the system is sold again.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 clearly discloses the franchisor's parent corporations, MTY Franchising Inc. and MTY Food Group, Inc. The FDD also includes consolidated financial statements for MTY Franchising USA, Inc., which encompasses the various acquired brands, providing a reasonably transparent view of the U.S. entity's financial position. The corporate structure is complex, but it does appear to be disclosed.
Potential Mitigations
- Your accountant should still carefully review the provided financial statements, including all footnotes detailing inter-company transactions.
- A franchise attorney can help you understand the legal relationship between the subsidiary franchisor and its parent companies.
- Asking the franchisor to clarify the specific resources the parent company dedicates to this brand can be a helpful inquiry for your business advisor.
Predecessor History Issues
Medium Risk
Explanation
The franchisor, MTY USA, is the result of numerous mergers and acquisitions of other franchise systems, such as The Extreme Pita Franchising USA, Inc. and Kahala Brands. Item 3 discloses litigation involving these predecessors and other affiliates. While the disclosures appear to be made as required, you inherit the legacy of a complex corporate history, which may include unresolved issues or a particular corporate culture shaped by these past entities.
Potential Mitigations
- Have your franchise attorney carefully review the history of the franchisor and its predecessors as outlined in Items 1, 3, and 4.
- During your due diligence calls with current and former franchisees, it may be useful to ask about their experience through any ownership transitions.
- A business advisor can help you assess if the current management has successfully integrated past systems and resolved historical issues.
Pattern of Litigation
High Risk
Explanation
Item 3 of the FDD details a significant volume of litigation involving MTY USA and its many affiliated brands and predecessors. These cases include numerous actions brought by franchisees alleging fraud, misrepresentation, and breach of contract, as well as regulatory enforcement actions. This extensive history of disputes may suggest a litigious corporate culture or systemic issues within the larger MTY family of brands that could pose a risk to your own franchise relationship.
Potential Mitigations
- Your franchise attorney must carefully analyze the nature, frequency, and outcomes of the litigation disclosed in Item 3.
- A pattern of franchisee-initiated lawsuits alleging similar claims across different brands is a significant red flag that requires thorough discussion with your attorney.
- Consider that a highly litigious environment can be costly and distracting, even if you are not directly involved in a lawsuit.
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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