Smokin’ Oak Wood-Fired Pizza
Initial Investment Range
$448,745 to $891,205
Franchise Fee
$50,250
Franchisor franchises the right to operate a “Smokin’ Oak Wood-Fired Pizza” and “Smokin’ Oak Wood-Fired Pizza & Taproom” restaurants that (a) offer wood-fired pizza and other menu items primarily baked in a wood-fired oven, along with beverage items for dine-in or takeout.
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Smokin’ Oak Wood-Fired Pizza May 12, 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
The audited financial statements for Fourth Avenue Restaurant Group, LLC (FARG LLC) reveal a significant financial risk. As of December 31, 2024, the company reports a members' equity deficit of ($326,496), meaning its total liabilities substantially exceed its total assets. While profitable in the most recent year, this negative net worth indicates potential financial instability, which could impact its ability to provide long-term support, invest in the brand, or withstand financial setbacks.
Potential Mitigations
- A franchise accountant should thoroughly analyze the franchisor's complete financial statements, including all footnotes and year-over-year trends.
- Discuss the implications of the negative net worth and the company's capitalization strategy with your financial advisor.
- Your attorney should confirm if any financial assurances, like a bond, are required by the state due to this financial condition.
High Franchisee Turnover
High Risk
Explanation
The franchisee turnover rates appear concerning for a small system. Item 20 data from 2022-2024 shows one termination and one unit that 'ceased operation' out of a system that grew from four to seven operating franchises. This represents a significant percentage of turnover relative to the system's size during that period. Such a rate could suggest potential issues with franchisee profitability, satisfaction, or the viability of the business model itself, warranting further investigation.
Potential Mitigations
- It is crucial to contact former franchisees listed in Item 20, especially those who terminated or ceased operations, to understand their reasons for leaving.
- A business advisor can help you calculate the effective turnover rate and benchmark it against industry averages for similar franchise systems.
- Your attorney can help you frame questions for the franchisor regarding the specific circumstances of these departures.
Rapid System Growth
Medium Risk
Explanation
The system has grown from four to seven franchised outlets over the last three years, which represents significant percentage growth for a small brand. While growth can be positive, rapid expansion combined with the franchisor's negative net worth, as shown in Item 21, may strain its capacity to provide adequate site selection, training, and ongoing operational support to all franchisees. You should assess if the support infrastructure is keeping pace with unit growth.
Potential Mitigations
- Engage a business advisor to question the franchisor about their plans for scaling support infrastructure to match unit growth.
- Interviewing a range of existing franchisees, from new to established, can provide insight into the current quality and responsiveness of franchisor support.
- Your accountant should review the franchisor's financials to assess if they have the resources to support this growth.
New/Unproven Franchise System
Medium Risk
Explanation
FARG LLC was formed in 2015 and began franchising with a small base of units. As a relatively young franchise system, its business model, support systems, and brand recognition may not be as proven as those of more established competitors. This can present higher risks related to operational challenges, the franchisor's long-term stability, and achieving profitability, especially given the franchisor's negative net worth shown in the financial statements.
Potential Mitigations
- Conduct extensive due diligence on the management team's prior experience in both the restaurant industry and franchising with your business advisor.
- Speaking with the earliest franchisees listed in Item 20 can offer critical insights into the system's evolution and the franchisor's performance.
- Your accountant's review of the franchisor’s financial stability is particularly important for a newer system.
Possible Fad Business
Low Risk
Explanation
The business model is centered on wood-fired pizza and self-pour taprooms, which are popular concepts. However, the longevity and resistance of this specific business model to shifting consumer tastes or economic downturns may not be fully established. You should consider if the concept has enduring appeal or if it relies on current trends that could fade over the course of your long-term franchise agreement, potentially impacting future profitability.
Potential Mitigations
- Engaging a business advisor to research the long-term market trends for wood-fired pizza and self-pour taproom concepts is advisable.
- Evaluating the franchisor's plans for menu innovation, marketing, and brand adaptation could provide insight into its long-term strategy.
- A discussion with your financial advisor about the concept's resilience to various economic conditions would be prudent.
Inexperienced Management
Low Risk
Explanation
This specific risk was not identified in the FDD package. Management experience is detailed in Item 2. Generally, inexperienced management can be a significant risk, as it may lead to inadequate franchisee support, poor strategic decisions, and an underdeveloped operational system. Franchisees depend on the franchisor's expertise for guidance and system-wide success.
Potential Mitigations
- A thorough vetting of the management team's background in both the specific industry and in managing a franchise system is a crucial step for any prospect.
- Speaking with existing franchisees about the quality of support and management's competence can provide valuable, real-world insights.
- A business advisor can help assess whether the management team's skills align with the needs of a growing franchise system.
Private Equity Ownership
Low Risk
Explanation
This specific risk was not identified in the FDD package. The documents do not indicate that the franchisor is owned by a private equity firm. When present, private equity ownership can be a risk if the firm prioritizes short-term investor returns over the long-term health of the franchise system. This could potentially lead to increased fees, reduced support, or a quick sale of the franchise brand.
Potential Mitigations
- When evaluating a PE-owned franchisor, it is wise to research the firm's track record with other franchise systems with a business advisor.
- Consulting an attorney to understand how a potential sale of the franchise system could impact your agreement is critical.
- Discussing any changes since the PE acquisition with existing franchisees can offer important perspectives.
Non-Disclosure of Parent Company
Medium Risk
Explanation
Item 1 discloses an affiliate, Henry Wellington of Bloomington, Inc., that owns and licenses the business system to FARG LLC. However, the FDD does not include this affiliate's financial statements. While this may be compliant, it means you cannot fully assess the financial health of the entity that owns the core intellectual property you will be using. Any financial weakness in this affiliate could pose a risk to the stability of the entire system.
Potential Mitigations
- Your attorney should inquire about the financial stability of the affiliate that owns the business system and why its financials are not included.
- A business advisor can help you assess the potential risks associated with a system owner that is a separate entity from the franchisor.
- Investigating the business history and public records of the affiliate, Henry Wellington of Bloomington, Inc., may provide additional context.
Predecessor History Issues
Low Risk
Explanation
This specific risk was not identified in the FDD package, as FARG LLC does not disclose any predecessors from which it acquired the business system. Generally, it is important to review the history of any predecessor entities, as their past issues, such as litigation, bankruptcy, or high franchisee turnover, could be inherited by the current franchisor and impact the system's health and reputation.
Potential Mitigations
- Your attorney should always carefully review Item 1 for any disclosed predecessors and investigate their history.
- A business advisor can help research public records and news archives for information about a predecessor's track record.
- Asking long-term franchisees about their experiences under any previous ownership can provide invaluable historical context.
Pattern of Litigation
Low Risk
Explanation
This specific risk was not identified in the FDD package. Item 3 states, "No litigation is required to be disclosed in this Item." The absence of significant litigation, particularly claims of fraud or breach of contract brought by other franchisees, is a positive indicator. A pattern of such litigation in other FDDs can be a major red flag about the franchisor's practices and system health.
Potential Mitigations
- Your attorney should always conduct an independent search for litigation involving the franchisor, as some disputes may not meet the criteria for disclosure in Item 3.
- It is good practice to ask existing franchisees about any disputes or disagreements they are aware of within the system.
- An accountant can review the financial statements for any notes related to litigation contingencies.
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
Unlock Full Risk Analysis
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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
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
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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
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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