New York Fries
Initial Investment Range
$450,000 to $1,233,400
Franchise Fee
$30,000
The franchise is for the establishment and operation of distinctive restaurants under “NEW YORK FRIES” and other trademarks that specialize in the sale of, among other things, French fried potatoes with ancillary sales of poutine and premium hot dogs (the “NYF Restaurants” or “Restaurants”).
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New York Fries March 27, 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
Recipe Unlimited US, LLC (Recipe US) is a new entity with a limited operating history. More importantly, financial statements for its parent, Recipe Unlimited Corporation, have prompted regulators in Illinois and Maryland to require that initial fees be deferred due to the franchisor's financial condition. This is explicitly stated in state addenda and represents a significant warning about the franchisor's financial ability to support you, creating a substantial risk to your investment.
Potential Mitigations
- A franchise accountant should thoroughly analyze the parent company's audited financial statements, paying close attention to debt levels and cash flow.
- Discuss the implications of the state-mandated fee deferrals and the underlying financial weakness with your franchise attorney.
- Your financial advisor can help you assess the heightened risk and determine if you have adequate capital reserves to withstand potential lapses in franchisor support.
High Franchisee Turnover
Low Risk
Explanation
This specific risk was not identified in the FDD package. Item 20 tables show that Recipe US has not had any franchised outlets in the United States operating during the last three years. Therefore, there is no history of franchisee turnover to analyze. High turnover is generally a major red flag indicating potential systemic problems, so its absence in the data (due to the system being new to the US) is notable but does not provide assurance of future stability.
Potential Mitigations
- It is crucial to speak with franchisees of the parent company's other brands in Canada to assess system-wide satisfaction and support.
- Your business advisor can help you evaluate the projected growth plans in Item 20 against the franchisor's capacity to support new locations.
- An attorney can help you understand your rights and the franchisor's obligations should the system experience high turnover in the future.
Rapid System Growth
Medium Risk
Explanation
The franchisor is new to the United States, with only four company-owned stores opened recently and plans for five franchised and five more company-owned stores in the next year. This indicates the beginning of a rapid growth phase. While growth is necessary, expanding too quickly can strain a franchisor's ability to provide adequate site selection, training, and operational support, potentially harming early franchisees who are crucial for establishing the brand's reputation in a new market.
Potential Mitigations
- A thorough discussion with your business advisor about the franchisor's infrastructure and personnel is needed to gauge their capacity for managing this growth.
- Question the franchisor directly about their specific plans for scaling franchisee support services as the system expands.
- Your accountant should review the parent company's financials to assess whether they have allocated sufficient capital to support this expansion.
New/Unproven Franchise System
High Risk
Explanation
Recipe US was organized in May 2021 and began offering franchises in the US in August 2021. As of the end of 2024, it had zero operating franchised units in the US, making it an entirely new and unproven franchise system in this market. This presents a heightened risk as the business model's viability, brand recognition, and the franchisor's ability to provide effective support in the US are all untested, despite the parent's experience in Canada.
Potential Mitigations
- With your business advisor, conduct extensive due diligence on the parent company's track record with its Canadian New York Fries franchisees.
- Your attorney should help you scrutinize the franchisor’s obligations, as a new system may have less defined support structures.
- Creating a conservative financial plan with your accountant is essential, as there is no US franchisee performance data to rely on.
Possible Fad Business
Low Risk
Explanation
This risk was not identified as a primary concern in the FDD package. The New York Fries concept, specializing in fresh-cut fries, has a long operating history in Canada since 1984 under the parent company. While tastes can change, the core product is a staple food item, not one tied to a short-lived trend. The business model appears to be based on a product with sustained consumer demand rather than a temporary fad.
Potential Mitigations
- A business advisor can help you research the long-term consumer trends for quick-service snack foods in your specific local market.
- Discuss the brand's history of product innovation and adaptation with the franchisor to gauge its ability to evolve over time.
- Your accountant can help model the financial resilience of a simple, focused menu against broader economic shifts.
Inexperienced Management
Medium Risk
Explanation
While some executives from the Canadian parent company have extensive restaurant industry experience, their direct experience is primarily within the Canadian market. Furthermore, some key personnel listed have only recently moved into their roles. For example, the Vice President of Franchising and the Director of Operations were both appointed in March 2025. This newness in key roles for the US expansion, combined with a lack of deep US-specific franchising experience, could present challenges in providing tailored support.
Potential Mitigations
- A business advisor can help you investigate the specific US market experience of the key management and support team.
- When interviewing the franchisor, focus questions on their strategy for adapting their Canadian experience to the unique challenges of the US market.
- Carefully review the training program outlined in Item 11 with your attorney to ensure it is comprehensive and relevant.
Private Equity Ownership
Medium Risk
Explanation
Item 1 states that the franchisor's parent, Recipe Unlimited Corporation, is a private corporation owned by Fairfax Financial Holdings and Cara Holdings Limited. Private equity ownership can introduce risks, such as a focus on short-term returns that may not align with the long-term health of franchisees. This could manifest as increased fees, reduced support, or a quick sale of the franchise system, which the Franchise Agreement permits without your consent.
Potential Mitigations
- It is advisable to research the ownership group's history and reputation with other franchise systems they have controlled.
- Your attorney should explain the implications of the 'Assignment by Franchisor' clause, which allows them to sell the brand.
- Discussing the long-term vision for the brand with both the franchisor and franchisees of the parent's other brands can provide valuable insight.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk is not present. Item 1 clearly identifies the parent company, Recipe Unlimited Corporation. Item 21 provides the parent's audited consolidated financial statements, and Exhibit A-2 includes an explicit, unconditional guaranty of performance from the parent company for the US franchisor's obligations. The disclosure appears to be transparent regarding the parent's identity and financial backing.
Potential Mitigations
- Your attorney should confirm that the parent guaranty is unconditional and legally binding in your state.
- An accountant should still review the parent company's financials to assess its capacity to back the guaranty effectively.
- It is good practice to understand the relationship between a parent and subsidiary, even with a guaranty in place, with help from a business advisor.
Predecessor History Issues
Low Risk
Explanation
This risk is not directly present as Recipe US, the franchisor, was newly organized in 2021 and does not have any predecessors itself. However, it is a wholly-owned subsidiary of Recipe Unlimited Corporation, which has a long and complex history with numerous brands, some of which are involved in litigation disclosed in Item 3. While not technically a predecessor, the parent's history is material to understanding the operational culture and potential risks you might face.
Potential Mitigations
- It is important to review the parent company's history of litigation in Item 3 and franchisee turnover in its other systems with your attorney.
- A business advisor can help you research the public reputation and history of the parent company's other brands.
- Speaking with long-term Canadian franchisees of the parent's brands can offer insights into the company's historical practices.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses several pending lawsuits initiated by former franchisees against the parent company, Recipe Unlimited Corporation, for other brands in its portfolio. The allegations are serious, including claims of fraudulent and negligent misrepresentation, breach of contract, and breach of good faith. Although these cases do not directly involve the New York Fries US system, a pattern of such litigation against the parent may indicate a potentially contentious or problematic franchisor-franchisee relationship culture within the broader organization.
Potential Mitigations
- A thorough review of the details of each lawsuit in Item 3 with your franchise attorney is essential to understand the nature of the allegations.
- Your attorney can help assess how the issues raised in these lawsuits might be relevant to your potential relationship with Recipe US.
- A business advisor can help you frame questions for the franchisor about these lawsuits and the steps taken to address the underlying issues.
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
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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
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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