Maui Wowi Logo

Maui Wowi

Kahala Franchising, L.L.C.
https://www.mauiwowi.com
1-480-362-4800
9311 E. Via De Ventura, Scottsdale, Arizona 85258

Initial Investment Range

$28,900 to $597,000

Franchise Fee

$24,000 to $60,000

We offer Maui Wowi franchises.

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Maui Wowi 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.

1

Franchisor Stability Risks

Start Here
Total: 10
3
3
4

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The financial statements for the guarantor, MTY Franchising USA, Inc., show a net loss of over $12.5 million for the fiscal year ending in 2024. This is a significant downturn from the prior year's profit. This financial performance could suggest instability and potentially impact the franchisor’s ability to provide support, invest in the brand, or fulfill its obligations to you, presenting a risk to your investment.

Potential Mitigations

  • A franchise accountant should perform a detailed analysis of the provided financial statements, including all footnotes and cash flow statements, to assess the franchisor's overall financial health.
  • It is important to discuss with your business advisor the potential impacts of the franchisor's financial performance on their support capabilities.
  • Your attorney can help you understand the strength and enforceability of the provided performance guaranty from the parent company.
Citations: Item 21, Exhibit V

High Franchisee Turnover

High Risk

Explanation

The franchise system is shrinking. Item 20 data reveals a consistent net decrease in the number of franchised outlets over the last three years, with a total of 31 outlets ceasing operations. In fiscal year 2024 alone, there were 10 franchise exits (non-renewals and other cessations) from a starting base of 89 units. This high turnover rate may indicate systemic issues, such as franchisee unprofitability or dissatisfaction with the system.

Potential Mitigations

  • Engaging a business advisor to analyze the turnover rates in Item 20 against industry benchmarks is a crucial step.
  • You should contact a significant number of former franchisees listed in Item 20 to understand their reasons for leaving the system.
  • Your attorney can help you formulate specific questions for the franchisor regarding the high rate of franchisee exits.
Citations: Item 20

Rapid System Growth

Low Risk

Explanation

This risk was not identified in the FDD package. The data in Item 20 shows that the franchise system has been shrinking, not growing rapidly. Rapid growth can sometimes strain a franchisor's ability to provide adequate support to new and existing franchisees. Since that is not the case here, this specific risk does not appear to be present.

Potential Mitigations

  • It is still wise to ask your business advisor to evaluate the franchisor’s support infrastructure relative to its size.
  • Discussing the quality and timeliness of support with current franchisees can provide valuable insight.
  • Your accountant can review the financials to confirm the franchisor has adequate resources to support its existing system.
Citations: Not applicable

New/Unproven Franchise System

Low Risk

Explanation

This risk was not identified. The disclosures in Item 1 show that the Maui Wowi brand has been in operation since at least 2002 and is now part of Kahala Franchising and MTY Food Group, a large and experienced multi-brand franchisor. An unproven system presents higher risks due to a lack of established operating procedures and brand recognition, which does not appear to be the case here.

Potential Mitigations

  • A review of the management team's experience in Item 2 with your business advisor can confirm their franchising expertise.
  • Asking existing franchisees about the maturity and effectiveness of the business systems is a valuable due diligence step.
  • Your attorney can help you verify the history and track record of the franchisor and its parent companies.
Citations: Not applicable

Possible Fad Business

Medium Risk

Explanation

The business is centered on coffee and smoothies, which can be subject to evolving consumer health and wellness trends. While coffee is a stable market, the smoothie segment can be fad-driven. The high franchisee turnover disclosed in Item 20 and the lack of a clear research and development pipeline in Item 11 could suggest that the brand may face challenges in adapting to new trends, potentially risking long-term relevance and profitability for your business.

Potential Mitigations

  • A business advisor can help you research the long-term market trends for smoothie and coffee concepts.
  • Asking the franchisor about their strategy for product innovation and brand evolution is an important question to ask.
  • Discussing the brand's local market relevance and staying power with current franchisees can provide practical insights.
Citations: Item 1, Item 11, Item 20

Inexperienced Management

Low Risk

Explanation

This risk was not identified. Item 2 of the FDD details the business experience of the key executives of the franchisor and its parent companies. The management team appears to have extensive experience in the restaurant industry and in managing large, multi-brand franchise systems. Inexperienced management can be a significant risk, as it may lead to poor support and strategic errors, but that does not appear to be a concern here.

Potential Mitigations

  • A conversation with your business advisor can help confirm the strength and relevant experience of the management team.
  • Asking current franchisees about their perception of the management team's competence and support is a practical verification step.
  • Your attorney can review the litigation history in Item 3 for any lawsuits involving management's conduct.
Citations: Not applicable

Private Equity Ownership

Medium Risk

Explanation

The franchisor is part of a large, publicly-traded portfolio of brands. This structure can be similar to private equity ownership, where decisions may prioritize short-term shareholder returns over the long-term health of an individual brand or its franchisees. The Franchise Agreement also gives the franchisor the right to sell or assign the system to another company without your consent, which could change the nature of the support and relationship you experience.

Potential Mitigations

  • It would be beneficial to have a business advisor help research the parent company's reputation and track record with its other franchise brands.
  • You should discuss with your attorney the implications of the franchisor's right to assign the agreement to a new owner.
  • Speaking with current franchisees about their experience with the parent company's management style provides direct insight.
Citations: Item 1, Item 17, FA § 12.5

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified. The FDD appears to properly disclose the corporate structure in Item 1, identifying Kahala Franchising, L.L.C. as the franchisor and MTY Franchising USA, Inc. as the parent company and guarantor. Financial statements for the guarantor are provided in Item 21. Failing to disclose a parent entity can hide financial weaknesses or other risks, but that does not seem to be the case in this document.

Potential Mitigations

  • Your attorney can confirm that the disclosed corporate structure and guarantees are complete and legally sound.
  • An accountant should review the provided parent financials to ensure they meet all disclosure requirements.
  • A business advisor can help you understand the relationships between the various entities mentioned in Item 1.
Citations: Not applicable

Predecessor History Issues

Medium Risk

Explanation

The FDD discloses past issues involving predecessor companies. Item 3 reveals concluded administrative actions against Maui Wowi Franchising, Inc., a predecessor, for selling unregistered franchises. Item 4 indicates a bankruptcy proceeding involving an affiliate's predecessor, related to different brands. While not all directly about Maui Wowi, this history within the larger corporate family suggests a past pattern of compliance and financial issues that could be relevant to your risk assessment.

Potential Mitigations

  • Your attorney should carefully review all disclosures regarding predecessors in Items 1, 3, and 4.
  • You can ask the franchisor what changes have been implemented to prevent recurrence of these past issues.
  • Discussing the system's history with long-term franchisees can provide valuable context beyond the FDD's text.
Citations: Item 3, Item 4

Pattern of Litigation

High Risk

Explanation

Item 3 discloses a history of litigation initiated by franchisees against the franchisor and its affiliates. Several cases involved allegations of misrepresentation, fraud, and breach of contract, with some resulting in financial settlements paid by the franchisor. A pattern of such disputes may indicate systemic issues with the franchisor's sales process, fulfillment of obligations, or overall franchisee relations, which presents a significant risk for a new franchisee.

Potential Mitigations

  • A thorough review of every case listed in Item 3 with your franchise attorney is essential to understand the nature of the allegations.
  • You should consider the pattern of franchisee-initiated lawsuits as a significant red flag in your overall risk assessment.
  • When speaking with former franchisees, you can ask them if they are familiar with any of these legal disputes.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 14
4
0
10

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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3

Financial & Fee Risks

Total: 10
3
6
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

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4

Legal & Contract Risks

Total: 16
5
6
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

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5

Territory & Competition Risks

Total: 5
3
1
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

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6

Regulatory & Compliance Risks

Total: 10
5
3
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

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7

Franchisor Support Risks

Total: 4
1
2
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

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8

Operational Control Risks

Total: 12
3
6
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.

9

Term & Exit Risks

Total: 18
8
6
4

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.