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How much does Naz’s Halal Food cost?
Initial Investment Range
$269,220 to $576,000
Franchise Fee
$40,000 to $115,000
The franchise is for a Naz’s Halal Food restaurant that offers a variety of menu items, featuring rice platters, gyros, burgers, sandwiches, wings, salads, and sides, all prepared in accordance with Halal standards and specifications.
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Naz’s Halal Food April 28, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: August 19, 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 FDD explicitly warns that the franchisor's financial condition calls its ability to support you into question. Naz's Franchising, LLC (Naz's) is a newly formed entity with a starting balance sheet of only $100,000 in cash, as shown in Item 21. This thin capitalization presents a significant risk that Naz's may lack the resources to fund its operations, provide promised support, or endure financial challenges, potentially relying heavily on new franchise fees to survive.
Potential Mitigations
- An experienced franchise accountant must review the financials and discuss the implications of the franchisor's limited capitalization and lack of operating history.
- It is crucial to ask your attorney about the protections offered by any state-mandated financial assurances, like fee deferrals, which are mentioned in some state addenda.
- Engage your financial advisor to assess if you have sufficient personal reserves to operate with potentially limited franchisor support.
High Franchisee Turnover
Low Risk
Explanation
This risk was not identified as Naz's only began offering franchises in 2025 and has no history of franchisee turnover. Generally, high turnover rates disclosed in Item 20 can signal systemic problems like low profitability or poor support. Monitoring this data in future FDDs will be critical.
Potential Mitigations
- A business advisor can help you analyze the Item 20 data for company-owned and licensed locations for any signs of instability.
- Speaking with former operators of licensed locations, if possible, can provide valuable insight a lawyer could help you prepare for.
- Before signing, it's wise to ask your attorney to request any updates on the franchisor's plans and initial franchise sales.
Rapid System Growth
Low Risk
Explanation
While there is no history of rapid franchise growth, Naz's projects opening 12 new franchised units in its first year. For a new franchisor with limited resources, this projected pace could strain its ability to provide adequate site selection, training, and opening support to all new franchisees simultaneously.
Potential Mitigations
- A business advisor should help you question the franchisor about their specific plans and staffing to support this projected growth.
- Understanding the franchisor's financial capacity to scale support infrastructure is a key task for your accountant.
- Your attorney can help you seek contractual commitments for support timelines and service levels.
New/Unproven Franchise System
High Risk
Explanation
Naz's is a new franchisor with a limited operating history, a fact explicitly stated as a "Special Risk." As of the FDD date, there are no operating franchisees. Investing in a new, unproven system carries higher risk, as its business model, support systems, and brand recognition have not been validated in the franchise market.
Potential Mitigations
- A business advisor should help you conduct deep due diligence on the management team's prior industry and franchising experience.
- Given the higher risk, your franchise attorney may be able to negotiate more franchisee-favorable terms.
- Speaking with operators of the pre-existing "licensed" locations is critical to understand the underlying business model's viability.
Possible Fad Business
Low Risk
Explanation
This specific risk was not identified in the FDD package. Halal food and fast-casual restaurants are established, long-standing market segments, not tied to a short-term trend. A fad business carries the risk that consumer interest will decline, potentially harming your long-term investment.
Potential Mitigations
- Even for an established concept, it's wise to have a business advisor help you assess the specific local market demand and competition.
- Your accountant can help you model the financial viability of the business based on realistic, long-term sales projections.
- Consult with your attorney regarding the length of the franchise agreement term and your ability to adapt to changing market conditions.
Inexperienced Management
Medium Risk
Explanation
Key leaders of Naz's, including the President and CFO, have backgrounds as teachers prior to their involvement with an affiliated company starting in 2020. While they have recent industry experience, their lack of a long track record in managing a national franchise system could present challenges in providing sophisticated support, strategic planning, and operational oversight.
Potential Mitigations
- A business advisor should assist you in thoroughly vetting the entire management team's background, especially their franchising-specific experience.
- It is important to ask the franchisor about their reliance on experienced franchise consultants or advisors.
- When speaking to licensed operators, inquire specifically about the quality and sophistication of management's support and strategic direction.
Private Equity Ownership
Low Risk
Explanation
The risk of private equity ownership was not identified in the FDD. Franchisors owned by PE firms may prioritize short-term returns over the long-term health of franchisees. This can sometimes lead to increased fees or reduced support.
Potential Mitigations
- It is still valuable to have your attorney review the assignment clauses in the Franchise Agreement to understand who could own the system in the future.
- A business advisor can help you understand the current ownership structure and its potential impact on the company's philosophy.
- Discussing the franchisor's long-term vision with management can provide insight into their commitment to the brand.
Non-Disclosure of Parent Company
Medium Risk
Explanation
Naz's is a newly formed entity that licenses the brand's trademarks from an affiliate, Naz's IP Holdings, LLC. The FDD does not provide financial statements for this parent or other key affiliates. This makes it impossible to assess the overall financial health of the enterprise that controls the brand and provides operational services, creating significant uncertainty.
Potential Mitigations
- An accountant should help you assess the risk posed by the lack of financial information for the parent and affiliated entities.
- It is important for your attorney to inquire why these financial statements are not included and to request them.
- Have your attorney review the licensing agreement between the franchisor and its affiliate to understand the stability of the trademark rights.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified, as the franchisor discloses it has no legal predecessors. In general, franchisees should be wary if a franchisor has a predecessor with a history of litigation, bankruptcy, or high franchisee turnover, as these issues could carry over into the new entity.
Potential Mitigations
- A business advisor can help you research the history of the affiliated company, Nazs Halal Inc., which previously licensed the brand.
- Your attorney can help you understand the distinction between a predecessor and an affiliate and its legal implications.
- Speaking with operators of locations licensed by the affiliate can provide insight into the brand's historical performance.
Pattern of Litigation
Low Risk
Explanation
This risk is not present, as the franchisor discloses no history of material litigation in Item 3. A pattern of lawsuits, particularly those initiated by franchisees alleging fraud or misrepresentation, can be a major red flag about a franchise system's integrity and viability.
Potential Mitigations
- Your attorney can still perform an independent search for litigation involving the franchisor, its affiliates, or its principals as a final check.
- Even without litigation, discussing any disputes or disagreements with current and former operators is a valuable part of due diligence.
- A business advisor can help you assess the overall health of franchisor-franchisee relationships within the system.
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
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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