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How much does SkinnyPizza cost?
Initial Investment Range
$270,500 to $590,500
Franchise Fee
$35,000 to $60,000
The franchise offered is for a fast-casual restaurant operating under the name “SKINNYPIZZA” or “SKINNYPIZZA & ACAI”.
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SkinnyPizza April 30, 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, SKINNYPIZZA FRANCHISE SYSTEMS LLC (SkinnyPizza FSS), explicitly warns that its financial condition calls its ability to provide support into question. Financial statements confirm this, showing the company was dormant with zero revenue in 2023 and 2024, has minimal assets, an accumulated deficit, and relies on affiliate advances. The parent company does not guarantee performance, posing a significant risk that SkinnyPizza FSS cannot fulfill its obligations to you.
Potential Mitigations
- A franchise accountant must thoroughly review the financial statements, including the notes detailing the company's dormant period and restart.
- Your attorney should advise on the implications of the parent company not guaranteeing performance, especially given the franchisor's weak financial state.
- Given the high risk, consulting a financial advisor to assess if you can withstand a potential lack of franchisor support is crucial.
High Franchisee Turnover
High Risk
Explanation
While Item 20 tables report zero franchisee turnover, this appears to be because they claim no franchised units existed. However, the notes to the financial statements in Exhibit A state that in 2022, "all franchise locations ceased operations." This indicates a past system-wide failure and a 100% turnover rate, a critical risk. This severe discrepancy itself is a major warning about disclosure accuracy.
Potential Mitigations
- Your attorney must help you demand a clear, written explanation from the franchisor for the contradiction between Item 20 and the financial notes.
- A business advisor should help you consider this historical system failure as a primary indicator of future risk.
- Interviewing anyone involved in the previous iteration of the franchise, if they can be found, is essential for due diligence.
Rapid System Growth
Low Risk
Explanation
This risk was not identified in the FDD Package. Rapid system growth can strain a franchisor's resources, potentially leading to inadequate support for franchisees. It's a key indicator of whether the franchisor's back-office capabilities are keeping pace with its sales.
Potential Mitigations
- Asking existing franchisees about the quality and timeliness of support during growth phases can provide valuable insight.
- An accountant's review of the franchisor's financials can help determine if they are investing in support infrastructure.
- Your business advisor can help assess if the franchisor's staffing and systems are adequate for the projected growth.
New/Unproven Franchise System
High Risk
Explanation
The franchisor is effectively a restart of a previously failed system. As noted in the financials, it was dormant in 2023 and is restarting franchising activities in 2024. It has no operating franchised outlets. This represents the high risk associated with an unproven (or re-proven) franchise system, minimal brand recognition in the franchise context, and potentially underdeveloped support systems despite its prior history.
Potential Mitigations
- A business advisor should help you conduct extensive due diligence on why the previous system failed and what has fundamentally changed.
- Your accountant must assess the franchisor's current capitalization to determine if it can sustain the restart.
- Engaging an attorney to negotiate more protective terms in the Franchise Agreement is critical given the heightened risk.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD Package. A business concept tied to a fleeting trend rather than sustained consumer demand can be a significant risk. When the fad ends, demand for the product or service may plummet, but your long-term contractual obligations to the franchisor will remain.
Potential Mitigations
- Independent market research with a business advisor can help assess the long-term consumer demand for the products or services.
- Speaking with an industry-specific consultant could provide perspective on whether the concept is a sustainable business or a temporary trend.
- Reviewing the franchisor's plans for future innovation and adaptation with your business advisor is important.
Inexperienced Management
High Risk
Explanation
Item 2 shows the CEO has prior experience with a pizza concept. However, the franchisor entity itself was dormant, ceased all operations, and closed its bank account before deciding to restart. This history, combined with a lack of current franchising operations, suggests a lack of recent, successful experience in managing a franchise system, posing a risk to the quality of support and strategic direction you will receive.
Potential Mitigations
- A business advisor should help you thoroughly vet the management team's track record, particularly concerning the reasons for the prior system's cessation.
- Asking the franchisor direct questions about what they learned from the prior failure is a necessary step in your due diligence.
- It is advisable to have your attorney scrutinize the franchisor's stated obligations for support in the Franchise Agreement.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD Package. Franchisors owned by private equity firms may prioritize short-term returns for investors over the long-term health of franchisees. This can sometimes lead to increased fees, cuts in support, or a quick sale of the franchise system.
Potential Mitigations
- Researching the track record of a private equity owner with other franchise brands can be illuminating; a business advisor can assist.
- Your attorney should review the assignment clause in the Franchise Agreement to understand how a sale of the system might affect you.
- Talking to franchisees who have been through a sale of their system can offer valuable perspectives.
Non-Disclosure of Parent Company
High Risk
Explanation
The FDD discloses a parent company, SkinnyPizza Brands LLC. However, Item 1 explicitly states, "Our Parent will not guarantee our performance." Given that the franchisor entity has a history of dormancy and financial weakness, the parent's refusal to provide a financial guarantee represents a significant risk. It means you must rely solely on the undercapitalized franchisor to fulfill all support obligations.
Potential Mitigations
- Your attorney should confirm the implications of the lack of a parent guarantee.
- An accountant's review of the franchisor's standalone financials is critical, as there is no parent backing to rely on.
- A business advisor should help you assess whether the franchisor can realistically provide promised support without a guarantee.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD Package. A franchisor may acquire its system from a predecessor. If the FDD does not fully disclose the predecessor's history, including any litigation, bankruptcy, or franchisee turnover, you may not have a complete picture of the system's past challenges or inherited issues.
Potential Mitigations
- Your attorney should carefully review Items 1, 3, and 4 for any mention of predecessors.
- If a predecessor is identified, a business advisor can assist with researching their public records and history.
- Asking long-tenured franchisees about their experience under any prior ownership can reveal important information.
Pattern of Litigation
Low Risk
Explanation
Item 3 states, "No litigation is required to be disclosed in this Disclosure Document." While this is positive on its face, it should be considered in light of the disclosures in the financial notes that the franchise system previously ceased all operations. The lack of litigation could simply be due to the system being dormant.
Potential Mitigations
- Your attorney can help you perform independent searches for past litigation that may not have met the technical disclosure requirements.
- A discussion with any former franchisees, if they can be located, might reveal past disputes that did not result in litigation.
- A business advisor can help you weigh the absence of litigation against the other significant risks present in the FDD.
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