Not sure if TGI Fridays is right for you?
Take our 1-minute franchise matching quiz to get in touch with a Franchise Advisor that can match you with your perfect franchise based on your goals, experience, and investment range.
Take the Quiz & Get MatchedTGI Fridays
How much does TGI Fridays cost?
Initial Investment Range
$2,721,000 to $4,326,000
Franchise Fee
$94,000 to $1,106,000
The franchise is for full service casual theme restaurants featuring a specialized menu and full bar service, operating as "TGI Fridays."
Enjoy our complimentary free risk analysis below
Unlock the full risk analysis to access 9 more categories covering 100+ risks.
TGI Fridays June 20, 2024 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 franchisor’s audited financial statements include a “going concern” warning from its auditor. This note, also present for its ultimate parent company, indicates substantial doubt about its ability to continue operating and meet its financial obligations. This raises significant questions about its long-term viability and its capacity to support you and the franchise system, representing a critical risk to your investment.
Potential Mitigations
- An experienced franchise accountant must review the financials, especially the 'going concern' note and the company's debt structure.
- Discuss with your attorney the potential implications of a franchisor bankruptcy on your franchise agreement and investment.
- Inquire with your business advisor about the parent company's specific plans to address the financial issues highlighted by the auditor.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a significant and consistent decline in the number of total and franchised restaurants over the last three years. The system has been shrinking, with a high number of terminations and non-renewals. This franchisee turnover could be an indicator of systemic issues, such as a lack of profitability or franchisee dissatisfaction, and suggests a considerable risk that your own business may struggle to succeed.
Potential Mitigations
- It is crucial to contact a significant number of former franchisees listed in Item 20 to understand why they left the system.
- Your accountant should help you analyze the churn rate and compare it to industry averages for casual dining restaurants.
- Engage a business advisor to assess whether the reasons for the high turnover could affect your specific market and business plan.
Rapid System Growth
High Risk
Explanation
The franchisor's system is shrinking, not growing rapidly, as shown in Item 20. The primary risk is not that support will be outpaced by growth, but rather that continued unit closures and financial instability, as noted in Item 21, may strain the franchisor's resources, potentially degrading the quality and availability of support for the remaining franchisees like you. This represents a significant risk to the operational assistance you will receive.
Potential Mitigations
- Interviewing a broad range of existing franchisees about the current quality and responsiveness of franchisor support is essential.
- Your accountant should review the franchisor's financials in Item 21 to assess if they have the resources to support the existing system amid closures.
- Seeking specific commitments on support levels in the franchise agreement should be discussed with your attorney.
New/Unproven Franchise System
Low Risk
Explanation
This risk was not identified in the FDD Package. The TGI Fridays system is a long-established brand, not a new or unproven one. However, investing in any franchise, regardless of age, carries inherent risks related to market changes and brand relevancy. A new system may lack proven operational procedures and support, increasing the risk of failure for early adopters who are essentially testing the business model.
Potential Mitigations
- For any franchise opportunity, it is important to have a business advisor help you research the brand's history and market position.
- An accountant can help you assess the financial stability and track record of any franchisor, new or established.
- Consulting with an attorney is vital to understand the contractual obligations, regardless of the system's age.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD Package. TGI Fridays is a well-established brand in the casual dining sector, which is a mature industry, not a temporary fad. However, all restaurant concepts face risks from changing consumer tastes and economic conditions. A business tied to a short-lived trend can leave you with a worthless investment and ongoing liabilities after public interest fades.
Potential Mitigations
- A business advisor can help you analyze the long-term market demand for any franchise concept's products and services.
- You should evaluate the franchisor’s plans for innovation and adaptation to stay relevant with your business plan.
- An accountant can help you consider the business model's resilience to economic downturns.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD Package. Item 2 shows that the key executives at TGI Fridays Franchisor, LLC (TGIF Franchisor) and its affiliate TGIF Inc. have extensive experience in the restaurant and franchise industries. However, you should note the planned merger with Hostmore plc, which could lead to future changes in management. Inexperienced leadership can result in poor strategic decisions and inadequate franchisee support.
Potential Mitigations
- It is wise to research the backgrounds of the current management team and the acquiring company's leadership with a business advisor.
- Speaking with existing franchisees about the quality of management's support and strategic direction is crucial.
- Your attorney can advise on the potential impacts of a change in corporate control on your franchise agreement.
Private Equity Ownership
Medium Risk
Explanation
This risk is present. The franchisor's ultimate parent, TGIF Holdings, LLC, is associated with TriArtisan Capital Advisors, a private equity firm. The FDD also discloses an impending merger with Hostmore plc. This ownership structure may prioritize short-term investor returns over the long-term health of franchisees. The Franchise Agreement gives the franchisor broad rights to sell the system, which could lead to a new owner with different priorities, creating uncertainty for your investment.
Potential Mitigations
- Researching the track record of both TriArtisan and Hostmore plc with their other investments is an important step for your business advisor.
- Discussing any changes in support or fees since the initial private equity acquisition should be a key part of your calls to existing franchisees.
- An attorney should review the assignment clauses to clarify your rights if the franchise system is sold again.
Non-Disclosure of Parent Company
High Risk
Explanation
The franchisor entity, TGI Fridays Franchisor, LLC, is a subsidiary within a complex structure, and its ultimate parent is TGIF Midco, Inc. The FDD does provide audited financial statements for both the franchisor and the parent company as required. However, these financials contain a 'going concern' warning, indicating significant financial risk at all levels of the corporate structure, which is a material fact you must consider.
Potential Mitigations
- An experienced franchise accountant must review the financials for both the franchisor and its parent company.
- It is important to understand the relationships and dependencies between the various corporate entities with your attorney.
- Assess the parent company's ability to support the franchisor, especially in light of the 'going concern' notice, with your financial advisor.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD Package. Item 1 discloses the franchisor's history and predecessors, including the 2017 Securitization Transaction where TGIF Inc. transferred its franchisor role to the current entity, TGI Fridays Franchisor, LLC. While the history is complex, the disclosure appears to meet legal requirements. In some cases, franchisors may downplay negative histories of predecessors, obscuring past system issues.
Potential Mitigations
- Your attorney should carefully review the predecessor information in the FDD.
- It is good practice to research the history of the brand and its prior owners with your business advisor.
- Asking long-term franchisees about their experiences under any previous ownership structures can provide valuable insight.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified in the FDD Package. Item 3 states that no litigation is required to be disclosed. A pattern of franchisee-initiated lawsuits alleging fraud or franchisor-initiated suits over contract disputes would be a major red flag, potentially indicating systemic problems with franchisee profitability, support, or the franchisor's business practices. The absence of such disclosures is a positive indicator for this specific risk.
Potential Mitigations
- Your attorney should still consider conducting a public records search for litigation involving the franchisor or its affiliates as part of due diligence.
- Asking current and former franchisees about their experiences with disputes, whether they resulted in litigation or not, is a wise precaution.
- Maintaining open communication and meticulous records can help prevent disputes from escalating, a strategy your business advisor can help develop.
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
Unlock Full Risk Analysis
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
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
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
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
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
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
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
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