NrGize Lifestyle Cafe Logo

NrGize Lifestyle Cafe

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

Initial Investment Range

$89,410 to $454,300

Franchise Fee

$21,600 to $51,850

We offer NrGize Lifestyle Cafe™ unit franchises. As a franchisee, you will operate a restaurant called NrGize Lifestyle Cafe preparing and serving low-calorie smoothies, fruit drinks, nutritional supplements, and other beverage and food items.

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NrGize Lifestyle Cafe 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
2
3
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor's parent and guarantor, MTY Franchising USA, Inc., reported a net loss of over $12.5 million for the fiscal year ended November 30, 2024, a significant decline from the prior year's profit. This recent loss, combined with high corporate debt, could indicate financial strain that may affect the franchisor's ability to support the system, invest in the brand, and fulfill its obligations to you.

Potential Mitigations

  • A franchise accountant should analyze the complete audited financial statements, including all notes, to assess the reasons for the recent loss and evaluate the company's overall financial health.
  • Discussing the financial trends and the parent company's stability with your business advisor is crucial before making an investment.
  • Your attorney can explain the terms and practical value of the Performance Guaranty provided by the parent company in Exhibit W.
Citations: Item 21, Exhibit V, Exhibit W

High Franchisee Turnover

Medium Risk

Explanation

Item 20 data reveals a modest level of franchisee turnover, with outlets ceasing operations or not renewing their agreements over the past three years. While the rate is not alarmingly high, the total number of franchised units has slightly decreased. This trend suggests some franchisees may be leaving the system, which could indicate challenges with profitability or franchisee satisfaction. You should investigate the reasons for these departures.

Potential Mitigations

  • Contacting current and former franchisees listed in Item 20 is essential to understand why some have left the system.
  • Your business advisor can help you analyze the turnover data in the context of the overall industry and system size.
  • Discussing the reasons for non-renewals and cessations directly with the franchisor may provide valuable context.
Citations: Item 20

Rapid System Growth

Low Risk

Explanation

This specific risk was not identified in the FDD package. Rapid system growth can be a concern if a franchisor's support infrastructure, such as training, site selection assistance, and field support, does not expand at the same pace as unit sales. This can leave new franchisees without the guidance and resources necessary for a successful launch and ongoing operation.

Potential Mitigations

  • It is wise to ask the franchisor about their plans for scaling support staff and systems to match projected growth.
  • A business advisor can help you assess whether the franchisor’s current infrastructure seems adequate for its expansion plans.
  • Your accountant can review the franchisor's financials to see if they are reinvesting in support systems.
Citations: Not applicable

New/Unproven Franchise System

Medium Risk

Explanation

While the NrGize Lifestyle Cafe brand has been franchising since 2006, the franchise system is part of a very large portfolio of brands under Kahala Franchising, L.L.C. (Kahala) and its parent MTY. You will need to assess if this specific brand receives sufficient focus and resources within the larger corporate structure. The system has experienced a slight decline in the number of franchised units over the last few years, which warrants investigation.

Potential Mitigations

  • A business advisor can help you conduct extensive due diligence on the brand's performance and management within the larger Kahala portfolio.
  • Speaking to the earliest franchisees on the Item 20 list can provide insight into the brand's history and the franchisor's long-term support.
  • An accountant should assist in assessing the franchisor's capitalization and resources allocated specifically to this brand.
Citations: Item 1, Item 2, Item 20

Possible Fad Business

Low Risk

Explanation

This risk was not identified. The business model, focused on smoothies and health-conscious food items, is part of a well-established market segment rather than a fleeting trend. However, any business in the food and beverage industry faces risks from changing consumer tastes and dietary trends. The franchisor's ability to innovate and adapt its menu and concept over time will be important for long-term viability.

Potential Mitigations

  • Your business advisor can help you assess the long-term market demand for this type of quick-service health food concept in your specific area.
  • It is prudent to evaluate the franchisor’s history of menu innovation and adaptation as discussed in Item 11.
  • With your financial advisor, consider the business model's resilience to economic downturns and shifts in health trends.
Citations: Not applicable

Inexperienced Management

Low Risk

Explanation

This specific risk was not identified. Item 2 of the FDD indicates that the key management personnel of the franchisor and its parent companies generally have extensive experience in the franchising and food service industries. Many executives have held leadership roles within Kahala Brands or its affiliates for several years, suggesting a stable and knowledgeable leadership team is in place to manage the franchise system.

Potential Mitigations

  • A business advisor can help you vet the management team's background and specific experience relevant to your success.
  • It is always a good idea to speak with existing franchisees about the quality of support and the responsiveness of the management team.
  • An attorney can review the executives' litigation history in Item 3 for any potential concerns.
Citations: Item 2

Private Equity Ownership

Medium Risk

Explanation

Item 1 discloses that the franchisor, Kahala Franchising, L.L.C., is part of a large portfolio of brands ultimately owned by MTY Food Group, Inc., a publicly-traded company. Such ownership structures may prioritize shareholder returns, which could potentially lead to decisions focused on short-term profitability, such as increasing fees or reducing franchisee support, over the long-term health of an individual brand within the portfolio. You should be aware of this dynamic.

Potential Mitigations

  • A business advisor can help you research the parent company's track record and reputation within the franchise industry.
  • Speaking with franchisees from various Kahala-owned brands can provide insight into how the parent company manages its portfolio.
  • Your attorney should review the assignment clauses in the Franchise Agreement to understand how a sale of the brand or franchisor could affect you.
Citations: Item 1

Non-Disclosure of Parent Company

Low Risk

Explanation

The FDD discloses that Kahala Franchising, L.L.C. is a subsidiary of its parent company, MTY Franchising USA, Inc., which acts as the Guarantor. The FDD properly includes the parent's audited financial statements in Item 21 and a Performance Guaranty in Exhibit W. Therefore, the risk of non-disclosure is not present, but the financial health of the parent company itself remains a key consideration for you.

Potential Mitigations

  • Having your franchise attorney review the scope and enforceability of the Performance Guaranty in Exhibit W is a critical step.
  • Your accountant should analyze the parent company's financial statements to assess its ability to back the franchisor's obligations.
  • Clarifying the relationship and support structure between the franchisor and its parent company with your business advisor is recommended.
Citations: Item 1, Item 21, Exhibit W

Predecessor History Issues

Low Risk

Explanation

This risk was not identified. Item 1 of the FDD provides a history of the franchisor and its predecessors. Item 3 discloses litigation history involving these entities. While there is litigation disclosed, the history of the predecessors themselves does not appear to be obscured. A thorough review of the disclosed litigation is still necessary to understand any inherited issues from these predecessor companies.

Potential Mitigations

  • Your attorney should carefully review the disclosed history in Items 1, 3, and 4 for any potential concerns related to predecessor entities.
  • It is wise to ask long-term franchisees about their experiences under any previous ownership to get a fuller picture.
  • A business advisor can help you research the public reputation of any named predecessor entities.
Citations: Item 1, Item 3

Pattern of Litigation

High Risk

Explanation

Item 3 discloses a number of concluded lawsuits involving the franchisor, its affiliates, or predecessors. These cases involve franchisees and cover claims such as breach of contract, fraud, and misrepresentation, with some resulting in significant payments by the franchisor's affiliates. This history of disputes could suggest potential for conflict within the system. You should carefully consider the nature and frequency of these legal actions.

Potential Mitigations

  • A franchise attorney must carefully review the details, allegations, and outcomes of every lawsuit disclosed in Item 3.
  • Discussing the litigation history with the franchisor can provide their perspective on the disputes.
  • Consider the pattern of litigation as a key data point when speaking with current and former franchisees about their relationship with the franchisor.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
3
1
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

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3

Financial & Fee Risks

Total: 10
5
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.

4

Legal & Contract Risks

Total: 16
5
4
7

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
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

Purchase the complete risk review to see all 102 risks across all 10 categories.

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

Purchase the complete risk review to see all 102 risks across all 10 categories.

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

Purchase the complete risk review to see all 102 risks across all 10 categories.

8

Operational Control Risks

Total: 12
6
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.

9

Term & Exit Risks

Total: 18
11
4
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.