Samurai Sam’s Teriyaki Grill Logo

Samurai Sam’s Teriyaki Grill

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

Initial Investment Range

$112,660 to $623,300

Franchise Fee

$13,000 to $60,000

As a franchisee, you will operate a restaurant called Samurai Sam’s Teriyaki Grill, preparing and serving specialized Japanese fast food and related menu items.

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Samurai Sam’s Teriyaki Grill 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
3
2
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The financial statements for the guarantor, MTY Franchising USA, Inc., show a net loss of over $12.5 million for the 2024 fiscal year. This is a significant downturn from a $16.9 million profit in 2023, largely due to over $44 million in impairment charges on assets and goodwill. Such losses can indicate underlying financial weakness, potentially impacting the franchisor's ability to support you, invest in the brand, or remain stable.

Potential Mitigations

  • A thorough review of the audited financial statements, including all footnotes and the auditor's report, by your accountant is essential.
  • Discuss the potential impacts of the parent company's financial health on the Samurai Sam's brand with a business advisor.
  • Seeking legal counsel to understand the strength and enforceability of the Performance Guaranty from MTY Franchising USA, Inc. is advisable.
Citations: Item 21, Exhibit V

High Franchisee Turnover

High Risk

Explanation

The franchise system is small and appears stagnant or shrinking. Item 20 data reveals the system declined from 13 to 12 franchised units in 2023 and showed no net growth in 2024. For a system of this size, even a single closure represents a significant percentage of the total units. This lack of growth may signal issues with brand viability, franchisee profitability, or overall satisfaction within the system, presenting a considerable risk to your investment.

Potential Mitigations

  • It is critical to speak with a significant number of current and former franchisees from the list in Exhibit U to understand their experiences and reasons for leaving.
  • Your business advisor should help you analyze the market viability and growth potential of this specific brand in your target area.
  • An accountant can help you model a worst-case scenario for sales based on the system's apparent stagnation.
Citations: Item 20

Rapid System Growth

Low Risk

Explanation

This specific risk was not identified in the FDD package. The data in Item 20 indicates the franchise system is currently stagnant or shrinking, not undergoing a period of rapid expansion. Rapid growth can strain a franchisor's ability to provide adequate support, so its absence here is not necessarily a negative factor, though the lack of any growth presents its own set of risks.

Potential Mitigations

  • Discuss the franchisor's strategic growth plans and targets for the next five years with a business advisor.
  • Your accountant should analyze the franchisor's financials to assess whether they have the capital to support future growth initiatives.
  • Your attorney can help you understand any development obligations you may have if the system does begin to grow.
Citations: Not applicable

New/Unproven Franchise System

Medium Risk

Explanation

While the Samurai Sam's brand has existed for many years, the current franchised system is very small, with only 12 operating units as of the FDD's issuance date. A system of this size may lack significant brand recognition, purchasing power, and a proven support structure on a national scale. This poses risks similar to a new system, including unproven market viability and potential volatility in performance, which you should carefully consider.

Potential Mitigations

  • A business advisor can help you conduct independent market research to gauge brand awareness and competition in your specific area.
  • Thoroughly vet the franchisor’s support capabilities by speaking with current franchisees from the list in Exhibit U.
  • Your accountant should help you develop conservative financial projections that account for the risks of operating within a small system.
Citations: Items 1, 20

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD. The business concept, which centers on Japanese-style teriyaki rice and noodle bowls, is a well-established segment within the quick-service and fast-casual restaurant industry. It is not based on a recent or fleeting trend, suggesting a lower risk of becoming a fad business with limited long-term consumer demand.

Potential Mitigations

  • Engage a business advisor to assess the long-term consumer demand for this restaurant category in your specific market.
  • Review the franchisor's history of menu innovation and adaptation with your marketing consultant.
  • Your financial advisor can help you analyze the business model's resilience to economic shifts and changing consumer tastes.
Citations: Not applicable

Inexperienced Management

Low Risk

Explanation

This specific risk was not identified in the FDD package. Item 2 details the business experience of the franchisor's key management personnel, who appear to have extensive backgrounds in the restaurant and franchising industries, primarily within the larger Kahala Brands and MTY Food Group portfolio. The risk appears to be less about a lack of experience and more about a potential lack of focus on this specific, smaller brand.

Potential Mitigations

  • A business advisor can help you assess whether the management team's experience is relevant to the specific challenges of this brand.
  • Discuss the management team's direct involvement and support quality with current franchisees.
  • Your attorney can help clarify the roles and responsibilities of key executives as they relate to your franchise.
Citations: Not applicable

Private Equity Ownership

Medium Risk

Explanation

The franchisor is part of a large, publicly-traded holding company, MTY Food Group, that operates similarly to a private equity firm by acquiring numerous brands. The financial statements show MTY Franchising USA, Inc. has recently made several large acquisitions. This structure creates a risk that management decisions will prioritize overall corporate growth and shareholder value over the long-term health and support of a very small brand like Samurai Sam's.

Potential Mitigations

  • Research the parent company's track record with its other smaller brands with the help of a business advisor.
  • Ask current franchisees from the list in Exhibit U about any changes in support or strategy following the MTY acquisition.
  • Your attorney should review the assignment clauses in the Franchise Agreement to understand your rights if the brand is sold again.
Citations: Items 1, 21

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD. Item 1 clearly discloses the parent companies, including Kahala Brands, Inc., MTY Franchising USA, Inc., and the ultimate parent, MTY Food Group, Inc. Furthermore, Item 21 provides the audited consolidated financial statements for MTY Franchising USA, Inc., which acts as the Guarantor for the franchisor's obligations, providing a degree of transparency into the financial backing of the system.

Potential Mitigations

  • Your attorney should confirm that the disclosed parent company is the correct entity providing the performance guarantee.
  • An accountant can help analyze the financial statements of the parent to assess its ability to support its subsidiaries.
  • Discuss the corporate structure with a business advisor to understand the flow of support and resources.
Citations: Not applicable

Predecessor History Issues

Low Risk

Explanation

This specific risk was not identified in the FDD. Item 1 provides a history of the brand's predecessors, including SP Franchising, Inc., and Kahala Franchise Corp. Additionally, Item 3 discloses past litigation and administrative actions involving these predecessors and other affiliates, suggesting that the franchisor is providing the required historical context, even though that history contains significant risks.

Potential Mitigations

  • Have your attorney review the disclosed history of predecessors for any concerning patterns or gaps.
  • Discuss the transition from prior ownership with long-term franchisees, if any can be identified and contacted.
  • A business advisor can help you research public records or news archives for more information on the predecessor companies.
Citations: Not applicable

Pattern of Litigation

High Risk

Explanation

The FDD discloses a significant and concerning pattern of litigation and administrative actions against the franchisor's parent company and affiliates. These cases include franchisee claims of fraud, misrepresentation, and violations of state franchise laws, with several resulting in substantial monetary settlements paid by the franchisor. This history suggests a high-risk legal environment and raises questions about the franchisor's business practices and relationship with its franchisees.

Potential Mitigations

  • A detailed review of every litigation summary in Item 3 with your franchise attorney is absolutely essential.
  • Consult with your attorney about the potential implications of this litigation history on your own franchise relationship.
  • You should consider this pattern a major red flag and discuss its weight in your investment decision with your legal and financial advisors.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 14
5
1
8

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: 0
0
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.

4

Legal & Contract Risks

Total: 0
0
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.

5

Territory & Competition Risks

Total: 0
0
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.

6

Regulatory & Compliance Risks

Total: 0
0
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.

7

Franchisor Support Risks

Total: 0
0
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.

8

Operational Control Risks

Total: 0
0
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.

9

Term & Exit Risks

Total: 0
0
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.

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.