Hangry Joe's Hot Chicken Logo

Hangry Joe's Hot Chicken

Hangry Joe’s Franchising, LLC
https://www.hangryjoes.com
1-571-386-1700
7601 Lewinsville Road, Suite 310, McLean, VA 22102

Initial Investment Range

$305,500 to $518,000

Franchise Fee

$35,000

provide a fast-casual Hot Chicken sandwich restaurant offering premium chicken sandwiches with different spice levels, along with a specialized menu

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Hangry Joe's Hot Chicken April 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.

1

Franchisor Stability Risks

Start Here
Total: 10
3
2
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

Hangry Joe's Franchising, LLC (Hangry Joe's LLC) financial statements in Exhibit G reveal significant financial weakness. The company has a negative net worth of over $1.5 million and current liabilities that far exceed current assets as of year-end 2024. The auditor's report also notes a restatement of prior year financials due to errors. This condition, also flagged as a 'Special Risk' by the franchisor, could impact their ability to provide support or even remain in business.

Potential Mitigations

  • Your accountant must conduct a thorough analysis of the audited financial statements, including the footnotes and auditor's notes on financial weakness.
  • Discuss the practical implications of the franchisor's negative equity and reliance on new franchise fees for revenue with your financial advisor.
  • Consult your attorney regarding the protections offered by state-mandated financial assurances, such as the surety bonds or fee deferrals mentioned in the addenda.
Citations: Item 21, Exhibit G

High Franchisee Turnover

Low Risk

Explanation

This risk was not identified in the FDD package. High franchisee turnover, reflected by numerous terminations or non-renewals in Item 20, can be a major red flag indicating systemic problems like unprofitability or poor franchisor support. The data for Hangry Joe's LLC in 2024 showed only one termination and no non-renewals or other cessations against a base of over 50 operating units, which does not suggest a high turnover rate for that period.

Potential Mitigations

  • An analysis of the Item 20 tables with your accountant can help you calculate the annual franchisee turnover rate.
  • Speaking with former franchisees listed in the FDD is a crucial step your business advisor can help you prepare for.
  • Your attorney can help you ask the franchisor targeted questions about the reasons for any past unit closures or transfers.
Citations: Not applicable

Rapid System Growth

High Risk

Explanation

Item 20 data shows extremely rapid growth, expanding from one to 95 franchised outlets in just three years. This rapid expansion, especially for a new franchisor with documented financial weakness and a large backlog of unopened stores, creates a significant risk that its support infrastructure for training, site selection, and ongoing assistance cannot keep pace. This may lead to inadequate support for you and other franchisees, potentially affecting the entire system's quality and stability.

Potential Mitigations

  • It is important to discuss with your business advisor whether the franchisor's support staff and systems are adequate for this level of growth.
  • Ask a broad range of existing franchisees, both new and established, about the current quality and responsiveness of franchisor support.
  • Your accountant should evaluate whether the franchisor's financial statements demonstrate sufficient investment in support infrastructure to match its sales.
Citations: Item 20

New/Unproven Franchise System

High Risk

Explanation

Hangry Joe's LLC began franchising in mid-2021 and has a limited operating history as a franchisor. The business model's long-term success is not yet proven, and the financials show a heavy reliance on initial franchise fees for revenue rather than royalties from mature, operating units. Furthermore, Item 1 discloses they do not operate any locations themselves, adding to the risk associated with an unproven system being guided by a franchisor without direct operational experience.

Potential Mitigations

  • Thoroughly investigate the prior industry and franchising experience of the management team listed in Item 2 with your business advisor.
  • Engaging an accountant to analyze the franchisor's reliance on franchise fees versus royalties is essential for assessing business model sustainability.
  • With your attorney, you could attempt to negotiate more protective terms in the franchise agreement to offset the higher risk of a new system.
Citations: Items 1, 2, 20, 21

Possible Fad Business

Medium Risk

Explanation

The 'hot chicken' concept is a popular but relatively recent trend in the fast-casual restaurant industry. While currently in demand, there is a risk that its popularity could be a fad with limited long-term, mainstream staying power. Investing in a trend-based concept could be risky if consumer tastes shift, potentially impacting your business's viability even as your long-term contractual obligations to the franchisor remain.

Potential Mitigations

  • Conduct independent market research with a business advisor to assess the long-term consumer demand for this specific food concept in your area.
  • Evaluate the franchisor's plans for menu innovation, research, and development that could help the brand adapt if the core trend fades.
  • Your financial advisor can help you create financial models that account for potential shifts in consumer demand over the franchise term.
Citations: Item 1

Inexperienced Management

Medium Risk

Explanation

While the executives listed in Item 2 have restaurant industry experience, the franchisor as an entity is new (since 2021). Crucially, Item 1 states, 'We have not conducted the type of business you will operate,' meaning they do not run their own stores. This lack of direct, hands-on experience as an operator could impact the quality and relevance of the support, training, and system evolution you receive, as they are not facing the same daily challenges.

Potential Mitigations

  • Speaking with a wide range of franchisees about the quality of the training and operational support is critical; your business advisor can help prepare questions.
  • Asking the franchisor directly how they develop and test new procedures without operating their own stores is a key diligence step.
  • Your attorney should review the franchisor's contractual support obligations in Item 11 to see how specific and enforceable they are.
Citations: Items 1, 2, 11

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD package. Private equity ownership, where a financial firm rather than an industry operator owns the franchisor, can sometimes lead to decisions that prioritize short-term investor returns over the long-term health of the franchise system. According to Item 1, Hangry Joe's LLC does not appear to be owned by a private equity firm.

Potential Mitigations

  • A business advisor can help you research the ownership structure of any franchise system you consider.
  • Your attorney can help you understand the implications of the 'Assignment' clause in the franchise agreement if the system is sold.
  • If a franchisor is PE-owned, speaking with franchisees who have been with the system before and after the acquisition can provide valuable insight.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD package. A franchisor might be a subsidiary of a larger parent company, and if the parent is not disclosed or its financials are not provided when required, it can hide financial instability or other risks. Here, Item 1 does not disclose a parent company, though it does note that an affiliate, TiG Food Services LLC, owns the trademarks, which is a separate risk related to intellectual property.

Potential Mitigations

  • It is wise to have your attorney confirm the corporate structure and identify any parent or significant affiliate companies.
  • An accountant should review whether a parent company's financial statements are required and have been provided, especially if the franchisor is thinly capitalized.
  • Your attorney can analyze any disclosed parent guarantee to determine the extent of the backing it provides.
Citations: Item 1, Item 13

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD package. A 'predecessor' is a company from which the franchisor acquired the business. If a franchisor has a predecessor, it must be disclosed in Item 1, and any associated litigation or bankruptcy would be in Items 3 and 4. This is important because it could reveal a troubled history for the franchise system. Hangry Joe's LLC does not disclose any predecessors.

Potential Mitigations

  • Reviewing Item 1 of any FDD with your attorney is crucial to identify any mentioned predecessors.
  • If a predecessor exists, a business advisor can help you research its history and reputation.
  • Speaking with long-term franchisees who may have operated under the predecessor can provide critical insights.
Citations: Not applicable

Pattern of Litigation

Low Risk

Explanation

This risk was not identified in the FDD package. A pattern of lawsuits against the franchisor by franchisees alleging fraud or misrepresentation, disclosed in Item 3, is a major red flag. Similarly, a high number of lawsuits initiated by the franchisor against franchisees can indicate an overly aggressive or litigious culture. Item 3 of this FDD states that no litigation is required to be disclosed, which is a positive sign.

Potential Mitigations

  • A thorough review of Item 3 with your franchise attorney is a critical due diligence step in any FDD analysis.
  • Even if no litigation is disclosed, asking current and former franchisees about their relationship with the franchisor can reveal potential friction points.
  • Your attorney can perform independent searches for litigation that may not have met the technical disclosure requirements.
Citations: Not applicable
2

Disclosure & Representation Risks

Total: 15
4
0
11

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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3

Financial & Fee Risks

Total: 10
0
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.

4

Legal & Contract Risks

Total: 16
9
2
5

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
1
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.

6

Regulatory & Compliance Risks

Total: 10
4
4
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.

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
7
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.

9

Term & Exit Risks

Total: 18
13
2
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.

10

Miscellaneous Risks

Total: 2
2
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.