Smalls Sliders
Initial Investment Range
$1,297,825 to $2,053,734
Franchise Fee
$52,500 to $112,500
We offer franchises for the operation of a 'Smalls Sliders Restaurant' that offers a limited menu of made-to-order sliders, fries, sauces, milkshakes, beverages and other ancillary food products that we authorize from time to time.
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Smalls Sliders May 8, 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
Smalls Sliders Franchising, LLC (Smalls LLC) has a significant negative net worth, with a Member's Deficit of over $9.6 million as of year-end 2024, an increase from a $5 million deficit the prior year. The company is experiencing substantial and growing annual net losses. The FDD explicitly discloses that its financial condition “calls into question the Franchisor’s financial ability to provide services and support to you.” This poses a material risk to its long-term viability and support capabilities.
Potential Mitigations
- An experienced franchise accountant must perform a thorough review of the financial statements in Exhibit F, including all footnotes.
- Discussing the franchisor's capitalization and ability to fund its obligations with your financial advisor is essential.
- Your attorney can explain the full legal implications of the 'Financial Condition' special risk disclosed by the franchisor.
High Franchisee Turnover
Low Risk
Explanation
This specific risk was not identified in the FDD package. Item 20 tables for 2022-2024 show zero franchisee terminations, non-renewals, or cessations of operation. While this indicates low historical turnover, it is important to note this is a very young system. High turnover in other systems can signal franchisee dissatisfaction or lack of profitability. The franchisor does disclose a separate risk related to a high number of franchises that are sold but not yet open.
Potential Mitigations
- It is critical to contact a broad sample of current and former franchisees from the list in Item 20 to discuss their experiences, as advised by your attorney.
- Analyzing multi-year turnover trends with your accountant can help assess the long-term health and stability of a franchise system.
- Your business advisor can help you compare the system's turnover rates against any available industry benchmarks.
Rapid System Growth
High Risk
Explanation
The system is growing very rapidly, expanding from 6 to 21 total outlets in two years. More significantly, the FDD discloses a special risk regarding 'Unopened Franchises,' with Item 20 Table 5 showing 39 franchise agreements signed for which outlets are not yet open. This rapid sales pace, combined with the company's weak financial position, may strain its ability to provide adequate site selection, training, and opening support to all its new franchisees, potentially causing delays.
Potential Mitigations
- You should ask the franchisor directly about its capacity and plans for scaling its support infrastructure to match unit growth.
- Interviewing a range of existing franchisees, especially recent ones, about the quality and timeliness of franchisor support is a crucial step for your due diligence.
- Your accountant should review the franchisor's financials in Item 21 to assess if it has the resources to support this rapid expansion.
New/Unproven Franchise System
High Risk
Explanation
Smalls LLC began franchising in July 2021 and is in the early stages of development. Its limited operating history as a franchisor means its systems, support structures, and brand recognition may be less developed than those of more established brands. This newness, combined with its disclosed financial weaknesses, increases the risk for early franchisees, as the long-term viability and profitability of the concept have not yet been proven over a significant period.
Potential Mitigations
- A thorough investigation of the management team's prior experience in both the restaurant industry and in franchising is vital; your business advisor can help.
- Speaking with the earliest franchisees in the system can provide valuable insight into the franchisor's learning curve and support evolution.
- Your attorney might be able to negotiate more favorable terms, such as enhanced support commitments, to offset the higher risk of joining a new system.
Possible Fad Business
Medium Risk
Explanation
The business model is centered on a very limited menu of sliders and fries, operating out of a trendy, modular shipping container-style building. While this unique format has novelty appeal, it may be susceptible to changing consumer tastes or being perceived as a fad. The long-term, sustainable demand for such a hyper-focused concept is less certain than for broader quick-service restaurants, posing a risk to the 15-year franchise term if popularity wanes.
Potential Mitigations
- Independently assess the long-term market demand for this specific, narrow food concept with your business advisor.
- It is important to evaluate the franchisor's plans for menu innovation, adaptation, and staying relevant beyond the initial trend.
- Consider the business model's resilience to economic downturns and increased competition with the help of your financial advisor.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD package. Item 2 discloses an executive team with significant prior experience at major, established franchise brands such as Tropical Smoothie Café, Krispy Kreme Doughnut Corp, Cinnabon, and Walk-On's Enterprises. This suggests the management team possesses relevant experience in both the food service industry and in managing franchise systems, which is a positive factor.
Potential Mitigations
- It is still wise to research the specific track records of key executives at their prior companies with your business advisor.
- When speaking with current franchisees, inquire about their direct experiences with the management team's leadership and support.
- Your attorney can help you verify the backgrounds and roles of the key personnel listed in Item 2.
Private Equity Ownership
High Risk
Explanation
Item 2 discloses that key board members are partners in 10 Point Capital, a private equity firm that owns an interest in the parent company, Smalls Holding. Private equity ownership can introduce a focus on short-term financial returns, which might lead to decisions like rapid expansion, increased fees, or reduced support services that may not align with the long-term health of franchisees' businesses. The PE firm's timeline for exiting its investment creates uncertainty about future ownership and system philosophy.
Potential Mitigations
- Researching the private equity firm's history and reputation with other franchise systems they have owned can provide valuable context; your business advisor can assist.
- Engaging with current franchisees to ask about any changes in system direction or support quality since the PE firm's investment is critical.
- Your attorney should review any clauses related to the sale or assignment of the franchise system to understand potential impacts of a future ownership change.
Non-Disclosure of Parent Company
Low Risk
Explanation
This specific risk was not identified. Item 1 of the FDD clearly discloses the parent company, Smalls Holding, LLC, and other affiliates. The franchisor entity, Smalls Sliders Franchising LLC, is a wholly-owned subsidiary of Smalls Holding, LLC. While the parent company's financials are not provided, there is no indication that they are required to be under FTC rules, as the parent does not appear to guarantee the franchisor's obligations. Therefore, there is no risk of non-disclosure.
Potential Mitigations
- Your accountant should still assess the disclosed franchisor financials to understand its standalone viability.
- Clarifying the exact nature of the relationship and any financial interdependencies between the parent and the franchisor can be a useful discussion point with your attorney.
- Your business advisor can help research the parent company for any additional public information.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 states clearly, "We do not have any predecessors." This means the current franchisor did not acquire the system's assets from a prior company that offered similar franchises. Therefore, there are no concerns about undisclosed negative history, litigation, or franchisee failures from a predecessor entity.
Potential Mitigations
- It is still prudent to ask your attorney to verify the corporate history of the franchisor entity.
- Conducting a public records search for the franchisor's name and its principals can sometimes reveal prior business activities; your business advisor can help.
- Ask early franchisees about the history of the company as they understand it.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified. Item 3 of the FDD states, "No litigation must be disclosed in this Item." This indicates that there is no current or recent history of material litigation involving the franchisor, its predecessors, or its management that would require disclosure under federal franchise law. This includes lawsuits with franchisees or government agencies related to fraud, misrepresentation, or franchise law violations.
Potential Mitigations
- Your attorney can perform an independent public records search to verify the absence of significant litigation.
- Engaging with a number of current and former franchisees to ask about their experiences and any disputes is a key due diligence step.
- A business advisor can help you research online forums or news articles for any reports of franchisee disputes.
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
Unlock Full Risk Analysis
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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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Purchase the complete risk review to see all 102 risks across all 10 categories.
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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