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Wahlburgers

Wahlburgers Franchising LLC
https://www.wahlburgers.com
1-781-749-4972
350 Lincoln Street, Suite 2501, Hingham, MA 02043

Initial Investment Range

$1,080,000 to $2,765,000

Franchise Fee

$40,000 to $76,950

The subfranchisee will operate a restaurant under the name "Wahlburgers," which features high quality gourmet hamburgers and certain ancillary branded merchandise such as clothing, souvenirs and novelty items.

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Wahlburgers June 10, 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.

1

Franchisor Stability Risks

Start Here
Total: 10
4
2
4

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The FDD explicitly warns that the subfranchisor, NativeWahl LLC (NativeWahl), has a negative net worth and questions its ability to provide support. Financial statements confirm this risk, showing NativeWahl is unprofitable with net losses in 2022 and 2023. The primary franchisor, Wahlburgers Franchising LLC (WF), also reported a significant net loss in 2023. This financial weakness from both entities creates doubt about their capacity to fund ongoing support, brand development, and meet their obligations to you.

Potential Mitigations

  • A thorough review of the financial statements for both NativeWahl and WF with your franchise accountant is critical to assess their viability.
  • Your accountant should analyze their cash flow, debt, and dependency on selling new franchises for revenue.
  • Engaging a business advisor to evaluate the risk of a dual-entity support structure where both parties show financial weakness is essential.
Citations: Item 21, FDD Exhibit F, Special Risks to Consider About This Franchise

High Franchisee Turnover

High Risk

Explanation

Data for the primary franchisor, WF, shows a concerning and accelerating rate of restaurant closures. In the full-service category, the number of units that “Ceased Operations - Other Reasons” increased each year, reaching 9 in 2023 alone. A total of 14 such closures over three years indicates potential systemic problems with the business model's profitability, operational viability, or franchisee satisfaction, posing a significant risk to your investment.

Potential Mitigations

  • Contacting former franchisees on the provided lists is crucial, and your attorney can help you formulate insightful questions about their reasons for leaving.
  • It is vital that your accountant analyze the turnover rates relative to system growth to understand the net health of the system.
  • Discussing these closure numbers directly with the franchisor should be guided by your business advisor to gauge their explanation and transparency.
Citations: Item 20 (Franchisor's Tables)

Rapid System Growth

High Risk

Explanation

Data from the primary franchisor, WF, shows rapid growth, with the number of franchised outlets more than doubling from 42 to 105 between the start of 2021 and the end of 2023. At the same time, both WF and the subfranchisor, NativeWahl, have reported recent net losses. This combination suggests that the system's growth may be outpacing its ability to provide adequate and stable support, posing a risk to both new and existing franchisees.

Potential Mitigations

  • Question the franchisor directly about its capacity and plans for scaling support infrastructure to match unit growth; a business advisor can help assess this.
  • Interview a broad range of existing franchisees about the current quality, responsiveness, and adequacy of franchisor support.
  • Your accountant should review the franchisors' financials to assess if they have the resources to support rapid growth.
Citations: Item 11, Item 20, Item 21

New/Unproven Franchise System

High Risk

Explanation

The subfranchisor, NativeWahl, is a new entity formed in late 2021 with a very limited operating history, having only one subfranchised unit in operation as of the end of 2023. The FDD's "Special Risks" section explicitly highlights this short operating history, stating it makes the investment riskier than a franchise in a more established system. This lack of a track record introduces significant uncertainty regarding its operational success and support capabilities.

Potential Mitigations

  • Conduct extensive due diligence on the management teams of both NativeWahl and the primary franchisor, WF, with your business advisor.
  • It is essential to speak with the single existing subfranchisee to understand their experience with the subfranchisor's support and systems.
  • Your attorney can help you assess the added risks of investing in a new subfranchise system under a more established brand.
Citations: Item 1, Item 2, Item 20, Item 21, Special Risks to Consider About This Franchise

Possible Fad Business

Low Risk

Explanation

This specific risk was not identified in the FDD package. A fad business is one tied to a fleeting trend without long-term consumer demand. Investing in such a concept is risky because your long-term contractual obligations to the franchisor will remain even after public interest has faded, potentially leading to declining sales and business failure.

Potential Mitigations

  • Assessing the long-term market demand for the product or service with a business advisor is a crucial step.
  • An evaluation of the franchisor's plans for innovation, adaptation, and staying relevant should be discussed with your business advisor.
  • Your financial advisor can help you consider the sustainability of the business model beyond current trends.
Citations: Not applicable

Inexperienced Management

Medium Risk

Explanation

While the primary franchisor's management has experience, the subfranchisor, NativeWahl, with whom you have the direct contract, is a new entity formed in October 2021. Its managers, while having some related business experience, have limited history managing this specific subfranchise system. This lack of a proven track record in executing the Wahlburgers subfranchise model could impact the quality and effectiveness of the support you receive.

Potential Mitigations

  • A business advisor can help you thoroughly vet the management team's background and relevant experience in both the specific industry and in managing a franchise system.
  • It is important to speak with the existing subfranchisee about their direct experience with NativeWahl's management and support quality.
  • Asking NativeWahl directly about how they leverage WF's experience to compensate for their own limited history is a key question for your due diligence.
Citations: Item 2

Private Equity Ownership

Low Risk

Explanation

The FDD does not indicate that the franchisor is owned by a private equity firm. This type of ownership can sometimes lead to decisions that prioritize short-term investor returns over the long-term health of franchisees, such as cutting support services or increasing fees. The absence of this ownership structure can be a positive indicator for system stability.

Potential Mitigations

  • It is still wise to research the ownership structure of any franchisor with your business advisor.
  • Your attorney can help review the franchisor's right to sell or assign the franchise system to another entity, which could be a private equity firm in the future.
  • Asking current franchisees about any recent changes in ownership or management philosophy can provide valuable insight.
Citations: Not applicable

Non-Disclosure of Parent Company

Medium Risk

Explanation

The FDD clearly discloses the parent companies for both the subfranchisor (Native Source Restaurant Group, LLC) and the franchisor (Wahlburgers Holding Company LLC). Financial statements for both the subfranchisor and franchisor are provided. However, the financials for the ultimate parent companies are not included, which may obscure the complete financial picture and backing of the system. This is particularly relevant given the disclosed financial weakness of the subfranchisor.

Potential Mitigations

  • Your accountant should review the provided financials and assess whether the absence of parent company financials creates a material gap in your risk assessment.
  • It is important to understand the legal relationship and any financial guarantees between the franchisor/subfranchisor and their parents by consulting your attorney.
  • A business advisor can help you investigate the reputation and stability of the parent companies through public information.
Citations: Item 1, Item 21, FDD Exhibit F

Predecessor History Issues

Low Risk

Explanation

This specific risk was not identified in the FDD package. Neither NativeWahl LLC (NativeWahl) nor Wahlburgers Franchising LLC (WF) report having any predecessors. A predecessor is a company from which the franchisor acquired the business concept. The lack of predecessors means the history presented is that of the current entities, which can simplify due diligence, but for a new entity like NativeWahl, it also confirms its limited track record.

Potential Mitigations

  • Confirming the business history of the key individuals in Item 2 with your business advisor is still a prudent step.
  • Your attorney can verify the corporate history to ensure no predecessors have been omitted from the disclosure.
  • When a franchisor is new, a business advisor can help you focus due diligence on the viability of the concept and management's experience.
Citations: Item 1

Pattern of Litigation

Low Risk

Explanation

The subfranchisor, NativeWahl, has no litigation history. The franchisor, WF, discloses one past lawsuit, *Leonard v. Wahlberg*, which involved internal disputes among the owners of its parent company over fiduciary duties and was settled in 2019. While this was not a dispute with a franchisee, it does point to a history of significant conflict within the founding ownership group of the overall brand.

Potential Mitigations

  • Your attorney should review the disclosed litigation to determine if any underlying issues could still affect the franchisor's stability or management.
  • A business advisor can help you research public records for any other litigation not required to be disclosed in Item 3.
  • Asking the franchisor about the resolution of the case and any subsequent changes in management or governance is a reasonable step in due diligence.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
4
0
11

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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3

Financial & Fee Risks

Total: 10
5
4
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.

4

Legal & Contract Risks

Total: 16
7
4
5

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
2
5
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.

7

Franchisor Support Risks

Total: 4
2
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.

8

Operational Control Risks

Total: 12
4
6
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.

9

Term & Exit Risks

Total: 18
8
4
6

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.