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How much does Premium Matcha Café Maiko cost?
Initial Investment Range
$329,300 to $412,300
Franchise Fee
$25,000
Eight USA Inc. operates a restaurant business under the name "Premium Matcha Café Maiko" offering products and services to the general public and compete with other green tea and ice cream chains and restaurants in the U.S.A.
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Premium Matcha Café Maiko May 6, 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, Eight USA Inc. (Eight USA), is profitable, but its auditors issued an 'Emphasis of Matter' highlighting extensive transactions with its Japanese parent company. Financial notes state the company's ability to continue as a 'going concern' is predicated on financial support from this parent, whose own financial statements are not provided. This creates a significant risk as the franchisor's stability appears entirely dependent on an overseas parent of unknown financial health.
Potential Mitigations
- An experienced franchise accountant should review the franchisor's financials, focusing on the implications of the 'Emphasis of Matter' and dependency notes.
- Your attorney should inquire why the parent company's financials are not provided, given the stated reliance for continued operations.
- Discuss the practical and financial risks of this dependency with your business advisor, especially concerning supply chain and support.
High Franchisee Turnover
High Risk
Explanation
The data in Item 20 for the 2023 calendar year indicates a potential franchisee churn rate of approximately 13% (combining terminations and non-renewals against the number of outlets at the start of the year). This level of turnover can be a significant indicator of potential issues within the system, such as challenges with profitability, support, or franchisee satisfaction. The FDD provides no explanation for these exits.
Potential Mitigations
- It is critical to contact former franchisees from the Item 20 list to understand their reasons for leaving the system; your attorney can help frame questions.
- Your accountant can help you analyze the turnover data for all three years to assess if 2023 was an anomaly or part of a trend.
- Ask the franchisor directly for an explanation of the non-renewals and terminations that occurred in 2023.
Rapid System Growth
Low Risk
Explanation
This risk was not identified in the FDD Package. Rapid growth can strain a franchisor's ability to provide adequate support to its franchisees. A system that expands too quickly may outpace its resources for training, site selection assistance, and ongoing operational guidance, potentially harming the quality and performance of individual units. This can be especially true for newer franchise systems.
Potential Mitigations
- Reviewing Item 20 data with an accountant can help you calculate the system's actual year-over-year growth rate.
- When speaking with existing franchisees, a business advisor would suggest asking about the quality and timeliness of franchisor support.
- Your attorney can analyze whether the franchise agreement contains sufficient commitments from the franchisor regarding support levels.
New/Unproven Franchise System
Medium Risk
Explanation
Eight USA has been operating for over five years and has more than 20 franchised outlets, so it is not a brand-new startup. However, it transitioned from a licensing model to a formal franchise system more recently and has a history of regulatory actions for prior non-compliance with franchise laws. This suggests a younger, less mature franchise program, which may carry more risk than a long-established system.
Potential Mitigations
- A business advisor can help you assess the risks associated with investing in a relatively young franchise system.
- Carefully question current franchisees about the evolution and maturity of the franchisor's support systems.
- Your attorney should review the franchise agreement for protections that may be more critical when dealing with a less-established franchisor.
Possible Fad Business
Medium Risk
Explanation
The business centers on matcha-flavored drinks and desserts. While matcha is a popular product, a business model focused so tightly on a specific, trend-sensitive ingredient could be considered a 'fad.' There is a risk that a decline in the popularity of this trend could negatively impact long-term consumer demand and the viability of the business, even while your contractual obligations continue.
Potential Mitigations
- Engage a business advisor to research the long-term market projections for matcha-based products versus broader café concepts.
- Question the franchisor on their strategy for product innovation and adaptation to evolving consumer tastes.
- When speaking with franchisees, ask about their local market's demand and how it has changed over time.
Inexperienced Management
High Risk
Explanation
The business experience disclosed for the franchisor's key executives, the President and a Manager, indicates their backgrounds are in renewable energy, real estate, and banking. There is no disclosed experience for these individuals in the food and beverage industry or in managing a franchise system. This lack of direct, relevant industry and franchising experience at the leadership level presents a significant operational and strategic risk for you.
Potential Mitigations
- It is crucial to discuss with current franchisees the quality of operational guidance and support they receive from the management team.
- Question the franchisor directly about who on their team possesses the day-to-day restaurant and franchise operations experience.
- Your business advisor can help you evaluate the potential impact of a leadership team that lacks a track record in this specific industry.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD Package. The franchisor is disclosed as a wholly-owned subsidiary of a Japanese corporation, not a private equity firm. Private equity ownership can sometimes introduce risks related to short-term profit motives, which may lead to reduced franchisee support, increased fees, or pressure to use affiliated vendors to maximize investor returns over a fixed timeline.
Potential Mitigations
- Your attorney can help you research the ownership structure of any franchisor to identify whether it is controlled by a private equity firm.
- If a franchisor is PE-owned, a business advisor can help investigate the firm's track record with other franchise brands.
- It is wise to ask existing franchisees about any changes in the system's culture or support since a potential PE acquisition.
Non-Disclosure of Parent Company
High Risk
Explanation
The FDD discloses that Eight USA is wholly-owned by a Japanese parent company and is 'fully reliant' on this parent for the supply of its core raw materials and for financial support to continue operations. Despite this critical dependency, the parent company's financial statements are not included in the FDD. This omission prevents you from assessing the stability of the entity upon which the entire franchise system's viability and supply chain depend.
Potential Mitigations
- Your attorney should request the parent company's financial statements from the franchisor, arguing they are material given the circumstances.
- An accountant should analyze the franchisor's financials to understand the full extent of the inter-company debt and support.
- A business advisor can help you assess the significant supply chain risk of relying on a single, foreign parent company for key products.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD Package. The franchisor properly discloses its predecessor in Item 1 and does not indicate any negative history, such as litigation or bankruptcy, associated with that entity. A franchisee should always review predecessor information, as it can reveal inherited problems or a history of issues within the system that may not be immediately apparent from looking at the current franchisor alone.
Potential Mitigations
- Your attorney should always carefully review Item 1 for any mention of predecessors.
- If a predecessor is identified, further due diligence, with the help of a business advisor, may be warranted to research its history.
- Asking long-term franchisees about their experience under any previous ownership can provide valuable insight.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses a pattern of regulatory actions against the franchisor in Washington, Virginia, and California. In each case, regulators determined that the company was effectively selling franchises without complying with state franchise registration and disclosure laws, resulting in consent orders and financial penalties. While not franchisee-initiated lawsuits for fraud, this pattern indicates a history of significant legal and compliance failures, raising concerns about the franchisor's sophistication and diligence.
Potential Mitigations
- Your franchise attorney must review these consent orders and explain their implications for the franchisor's operational history and reliability.
- Discuss with the franchisor what changes they have made to their compliance and legal functions to prevent future violations.
- Consider this history as a significant red flag regarding the franchisor's past business practices when making your investment decision.
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