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How much does Mr. Charlie's Told Me So cost?
Initial Investment Range
$283,090 to $915,750
Franchise Fee
$54,000 to $283,500
Mr. Charlie’s World LLC offers franchises for the operation of a fast-service restaurant that operates under the name MR. CHARLIE’S TOLD ME SO and features plant-based hamburgers, plant-based chicken sandwiches and other meatless menu items.
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Mr. Charlie's Told Me So April 18, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: August 22, 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's audited financial statements in Item 21 reveal significant financial weakness. For its initial period of operation, Mr. Charlie's World LLC (MCW) reported a net loss and is dependent on a very large receivable from a related party for most of its assets. Its cash on hand is low. This financial position may impact its ability to support you and grow the brand, potentially creating risk for your investment.
Potential Mitigations
- A thorough review of the franchisor's financial statements, including all footnotes, with your accountant is essential to assess its viability.
- It is important to discuss the implications of the large related-party receivable and operating loss with a financial advisor.
- Your attorney should inquire about any parent company guarantees or other financial backing arrangements that might mitigate this risk.
High Franchisee Turnover
Low Risk
Explanation
This risk was not identified in the FDD package. As a new franchisor with no operating franchised units at the end of the last fiscal year, there is no historical data in Item 20 to indicate high franchisee turnover. Assessing franchisee satisfaction and system health through direct communication is a critical part of due diligence, as high turnover can signal underlying problems with profitability, support, or the business model itself.
Potential Mitigations
- To understand future potential, you should ask the franchisor about their franchisee support systems and success metrics with help from a business advisor.
- Engaging a franchise attorney can help you understand the termination and renewal clauses that will affect franchisee tenure in the future.
- Discussing the business model's projected profitability with an accountant will help you assess its long-term viability.
Rapid System Growth
Medium Risk
Explanation
The FDD shows MCW is a new system with plans for growth, including signed agreements for future locations. While growth is not yet rapid, the franchisor's limited operating history and weak financial position, as shown in Item 21, create a risk that even moderate growth could strain its ability to provide adequate training and support. This could potentially leave you without the resources you need to operate effectively.
Potential Mitigations
- Inquiring with the franchisor about their specific plans to scale their support staff and infrastructure should be a priority; a business advisor can help evaluate their response.
- Your accountant should analyze whether the franchisor's current financial resources are sufficient to support its growth projections.
- Asking a franchise attorney about the franchisor's contractual support obligations is a crucial step.
New/Unproven Franchise System
High Risk
Explanation
MCW is a new franchise system, having been formed in July 2024 and starting to offer franchises the same year. The FDD explicitly highlights this as a 'Special Risk,' noting the franchisor's limited operating history. Investing in an unproven system carries higher risks, as its business model, brand recognition, and support infrastructure are not yet well-established. This may impact your potential for success and the long-term viability of your investment.
Potential Mitigations
- A business advisor can help you conduct extensive due diligence on the founders' track records and the viability of the underlying business concept.
- You should have your franchise attorney attempt to negotiate more protective terms in the agreement to offset the higher risk of a new system.
- Building a conservative financial model with your accountant, assuming a longer ramp-up period due to limited brand recognition, is advisable.
Possible Fad Business
Low Risk
Explanation
The franchise operates in the plant-based fast-food sector, a market that has seen significant growth and is a strong consumer trend. While any trend-based business carries some risk of changing consumer tastes over time, the broader shift towards plant-based diets suggests this is more of a sustained market evolution than a short-term fad. However, long-term viability depends on the brand's ability to adapt and compete.
Potential Mitigations
- Engaging a business advisor to research the long-term outlook for the plant-based food industry is a wise step.
- It is important to evaluate the franchisor's commitment to research and development for future menu innovation.
- An accountant can help you model different scenarios for consumer demand to understand potential financial outcomes.
Inexperienced Management
High Risk
Explanation
MCW was formed in July 2024, and its management team, while having some experience in another franchise system, is new to this specific brand. Furthermore, key founders are involved in significant litigation detailed in Item 3, with allegations including breach of fiduciary duty and conversion of funds. This combination of a new system and serious legal challenges involving its principals presents a considerable risk regarding leadership stability, ethical conduct, and operational execution.
Potential Mitigations
- Having your attorney thoroughly investigate the litigation disclosed in Item 3 is critical to understanding the risks associated with management.
- A business advisor can help you assess whether the management team's prior experience is relevant and sufficient for this new venture.
- You should consider the potential impact of the litigation on the brand's reputation and the franchisor's ability to focus on supporting you.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package. There is no disclosure in Item 1 or elsewhere that indicates MCW is owned or controlled by a private equity firm. Franchisees in PE-owned systems can sometimes face pressures related to short-term profitability goals over long-term brand health. While not a factor here, understanding the franchisor's ownership structure and motivations is always a key piece of due diligence.
Potential Mitigations
- Your attorney can help you verify the ownership structure detailed in Item 1 of the FDD through public record searches.
- Discussing the franchisor's long-term vision for the brand with a business advisor can provide insight into their strategic priorities.
- An accountant can analyze the franchisor's financial statements for signs of aggressive, short-term financial engineering.
Non-Disclosure of Parent Company
Medium Risk
Explanation
MCW discloses a parent company, Sona Terra Inc., but does not provide its financial statements. Because MCW is a newly formed entity with a net loss and minimal cash, the financial strength of its parent is a material consideration for assessing its ability to support the franchise system. The absence of the parent's financials creates a gap in the information needed to fully evaluate the overall stability and backing of the franchisor.
Potential Mitigations
- Your accountant should analyze the franchisor's financials in light of the missing parent company information to assess the potential risk.
- It is advisable to ask your attorney whether the parent company provides any formal guarantee of the franchisor's obligations.
- A financial advisor can help you understand the implications of investing in a thinly capitalized subsidiary without full transparency into the parent.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 does not disclose any predecessors from which MCW acquired its assets or the franchise system. When predecessors exist, it is important to scrutinize their history for issues like litigation, bankruptcy, or high franchisee failure rates, as these can be inherited by the current franchisor. A clean slate in this regard means the focus is solely on the current entity's performance and history.
Potential Mitigations
- Your attorney can confirm the franchisor's corporate history as stated in Item 1.
- A business advisor can help you research the background of the founders and their prior business ventures for additional context.
- Reviewing Items 3 and 4 for any litigation or bankruptcy history of the current franchisor entity and its management is a crucial step for your accountant.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses pending litigation against two of the franchisor's founders and an affiliate, involving serious allegations of breach of fiduciary duty, conversion of money, and theft, with the plaintiff seeking over $1 million in damages. While MCW denies the allegations, the existence of such a lawsuit against key principals raises significant questions about their business practices and integrity. This could create reputational damage for the brand and distract management from supporting franchisees.
Potential Mitigations
- A thorough review of the specific allegations and potential outcomes of the litigation disclosed in Item 3 with your attorney is absolutely essential.
- Consider the potential impact on the brand's public image and on management's ability to lead the franchise system with a business advisor.
- You should ask the franchisor how they are managing this legal challenge and ensuring it does not affect franchisee support.
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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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
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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
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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
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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
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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