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Toastique

Toastique Holdings, LLC
https://www.toastique.com
1-202-484-5200
764 Maine Avenue SW, Washington, D.C. 20024

Initial Investment Range

$370,117 to $1,098,342

Franchise Fee

$93,000 to $210,000

The franchise that we offer is for Toastique, a gourmet fast casual toast and juice bar serving a fresh, seasonal, and responsibly sourced menu of toast style meals, fruit bowls, juices, smoothies, and other menu items.

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Toastique January 14, 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
4
2
4

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The financial statements for Toastique Holdings, LLC (Toastique) show positive net income, but it decreased in 2024 from 2023 despite revenue growth, and a significant portion of revenue comes from initial franchise fees and related-party management fees, not royalties. This, combined with active franchisee litigation alleging fraud (Item 3) and high franchisee turnover (Item 20), suggests potential financial and operational instability that could impact the franchisor's ability to support you.

Potential Mitigations

  • A franchise accountant should conduct a deep analysis of the audited financials, focusing on cash flow, debt, and the heavy reliance on one-time franchise fees.
  • Discuss the franchisor's financial health and the ongoing litigation with your business advisor to assess long-term viability.
  • It is crucial your attorney review the context of the Item 3 litigation to understand its potential impact on the franchisor's stability.
Citations: Items 3, 20, 21, FDD Exhibit D

High Franchisee Turnover

High Risk

Explanation

Item 20 and Exhibit I data from 2024 indicate a high rate of franchisee churn. The system, which started the year with 16 franchised outlets, had 6 franchisees leave the system (one termination, one ceased operation, and four transfers). This represents a 37.5% annual turnover rate. Such a high number of departures, especially the termination and cessation, may indicate significant franchisee dissatisfaction, an unsustainable business model, or other systemic problems.

Potential Mitigations

  • Your business advisor should help you contact a significant number of former franchisees listed in Exhibit I to understand why they left the system.
  • It is imperative that your attorney investigates the circumstances surrounding the termination disclosed in Item 20.
  • An accountant can help you model the financial impact of potential business failure, given the high turnover rates.
Citations: Item 20, FDD Exhibit I

Rapid System Growth

High Risk

Explanation

The franchise system is expanding at an extremely fast pace, growing from 7 to 30 franchised outlets in the 2023-2024 period. This rapid growth, when combined with the high franchisee turnover rate and active litigation, suggests a significant risk that the franchisor's support systems, including training and operational assistance, may be overstretched. This could lead to a decline in the quality of support you receive while the franchisor focuses on selling new units.

Potential Mitigations

  • Engaging a business advisor to question the franchisor about their specific plans to scale support infrastructure is a key diligence step.
  • You should speak with a wide range of franchisees, both new and established, to gauge the current quality and responsiveness of franchisor support.
  • Your accountant should review the financials to determine if spending on franchisee support is keeping pace with the growth in units.
Citations: Item 20

New/Unproven Franchise System

Medium Risk

Explanation

While the franchisor's predecessor was formed in 2018, the system is still relatively young and has experienced its most significant growth in the last two years. The combination of its youth, high franchisee turnover, and active litigation suggests the business model and support systems may not be fully proven at a larger scale. Investing in a newer system carries a higher risk of systemic challenges and potential failure compared to more established brands.

Potential Mitigations

  • A business advisor can help you conduct thorough due diligence on the long-term viability of the brand and its market niche.
  • Consulting with the earliest franchisees about the evolution of the system and the franchisor's performance over time is highly recommended.
  • Your attorney might be able to negotiate more franchisee-favorable terms to help offset the risks associated with a newer system.
Citations: Items 1, 2, 20

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD Package. A fad business is one tied to a short-lived trend, which can be risky as consumer interest may decline, leaving you with a long-term contract for an unpopular concept. You should always assess whether a franchise offering has sustainable, long-term market demand.

Potential Mitigations

  • To better assess market staying power, consider working with a business advisor to analyze long-term consumer trends.
  • An accountant's assistance will be valuable in modeling the financial impact if customer demand were to decrease significantly after the initial trend fades.
  • Legal counsel should review termination clauses to understand your obligations if the business becomes unviable due to shifting trends.
Citations: Item 1

Inexperienced Management

Low Risk

Explanation

This risk was not identified in the FDD Package. The key executives have been with the brand since its inception in 2018. In franchising, a management team that lacks experience in both the specific industry and in managing a franchise system can pose a risk, as they may be unprepared to provide adequate support or make sound strategic decisions for the network.

Potential Mitigations

  • A business advisor can help you evaluate the backgrounds of the key management personnel listed in Item 2.
  • Speaking with current franchisees provides valuable insight into the quality and effectiveness of the management team's support.
  • An attorney can help you understand the contractual obligations of the franchisor, regardless of their experience level.
Citations: Item 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD Package. Private equity ownership can introduce risks, as the firm's goal is typically to grow and sell the franchise system within a specific timeframe. This can sometimes lead to decisions that favor short-term investor returns over the long-term health of franchisees.

Potential Mitigations

  • If a franchisor is PE-owned, a business advisor can help research the firm's reputation and track record with other franchise brands.
  • It is prudent to have your attorney review assignment clauses in the franchise agreement to understand what happens if the system is sold.
  • Discussing any changes since the PE acquisition with existing franchisees can provide valuable perspective.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD Package. Franchisors must disclose parent companies in Item 1. If a franchisor is a thinly capitalized subsidiary, the financial statements of the parent company may be required for you to fully assess the financial strength backing your investment. The absence of such disclosure when it appears warranted is a red flag.

Potential Mitigations

  • Your attorney should verify the franchisor's corporate structure and identify any undisclosed parent companies that may have control.
  • If a parent company exists and guarantees the franchisor's performance, an accountant should review its financial statements.
  • Legal counsel can advise on the implications if a required parent company financial statement is not provided.
Citations: Not applicable

Predecessor History Issues

Medium Risk

Explanation

Toastique discloses a predecessor entity formed in 2018, with the current entity formed in 2020. An ongoing arbitration action against the franchisor includes a claim for violation of the Nevada Deceptive Trade Practice Act, which could relate to actions during the predecessor's time. This history may introduce risks or liabilities from the prior entity that could affect the current franchisor's operations and your investment.

Potential Mitigations

  • Your attorney should carefully analyze the disclosed litigation and its connection to the predecessor entity.
  • A business advisor can help you investigate the history and reputation of the predecessor brand, if possible.
  • It is wise to ask the franchisor for more details regarding the transition from the predecessor to the current company.
Citations: Items 1, 3

Pattern of Litigation

High Risk

Explanation

Item 3 discloses that a former franchisee has initiated arbitration against Toastique, alleging extremely serious claims, including fraud, fraudulent misrepresentation, and violation of the Nevada Deceptive Trade Practice Act. While this is a single action, the severity and nature of the allegations present a significant risk, suggesting deep-seated disputes over the franchise sales process and contractual performance. Toastique denies the allegations.

Potential Mitigations

  • Your attorney must review the details of this arbitration case and explain the potential implications for you and the franchise system.
  • A business advisor can help you assess the operational risks if the franchisee's claims about breach of contract or lack of support are valid.
  • Treating these allegations as a significant red flag, you should conduct extra-thorough due diligence by speaking with other franchisees.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
6
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: 10
4
4
2

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: 16
11
2
3

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: 5
3
2
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: 10
7
1
2

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: 4
3
1
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: 12
10
1
1

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: 18
14
1
3

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.