Wing Zone
Initial Investment Range
$142,000 to $840,500
Franchise Fee
$62,000 to $100,000
You will operate a retail restaurant which serves chicken wings, boneless wings, chicken tenders and sandwiches, related food products, beverage products, and merchandise in a casual sit-down and/or take-out format under the name “WING ZONE®.”
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Wing Zone July 1, 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 explicitly warns of its financial condition as a special risk. The audited financial statements in Item 21 confirm this, showing the parent company, Wing Zone Holdings, LLC, incurred a net loss of nearly $3 million in 2023 and has a significant working capital deficit. This financial weakness may impair its ability to provide promised support, grow the brand, or meet its obligations to you, increasing your investment risk.
Potential Mitigations
- An experienced franchise accountant must conduct a deep analysis of the parent company's financial statements, including cash flow and debt obligations.
- Discuss the franchisor's plans for achieving profitability and its sources of funding for ongoing support with your financial advisor.
- Your attorney should investigate if any financial assurances, such as a bond or escrow, are required by your state due to this financial condition.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a high rate of franchisee cessations. In 2023, seven franchised restaurants ceased operations for "other reasons" from a starting base of 27 units, which is a significant turnover rate of nearly 26%. Exhibit F, listing former franchisees, shows this trend may be continuing with more recent closures. This level of churn is a critical indicator of potential systemic problems, such as franchisee unprofitability or dissatisfaction with the system.
Potential Mitigations
- It is critical to contact a significant number of the former franchisees listed in Exhibit F to understand why they left the system.
- In discussions with current franchisees, your business advisor should help you ask specifically about profitability, franchisor support, and the high turnover rate.
- Your accountant should use the high turnover rate as a key factor when assessing the overall risk of your investment.
Rapid System Growth
Medium Risk
Explanation
Item 20 shows the number of franchised units grew from 27 to 30 in 2023, with 10 new openings. However, Item 21 financials show the franchisor is experiencing significant operating losses. This combination suggests that growth in unit count might be prioritized over building a sustainable support infrastructure, potentially straining the franchisor's ability to adequately assist its new and existing franchisees. Rapid sales could be funding operations, which is an unsustainable model.
Potential Mitigations
- With your business advisor, question the franchisor directly about its capacity to support the growing number of new units.
- An accountant should evaluate if the franchisor's financial resources, as shown in Item 21, are sufficient to support its growth trajectory.
- In speaking with franchisees, ask newer owners about the quality and timeliness of the support they received during their opening phase.
New/Unproven Franchise System
High Risk
Explanation
The franchisor explicitly states in the 'Special Risks' section that it has a 'limited operating history'. While the brand has existed since 1998, the current ownership group acquired it in December 2020. This means you are investing with a management team that has a relatively short track record managing this specific system. This newness, combined with the disclosed financial weaknesses, increases the risk compared to a system with a long-established and stable ownership.
Potential Mitigations
- A business advisor can help you conduct extensive due diligence on the current management team's prior experience in franchising and the restaurant industry.
- Speaking with franchisees who have been in the system both before and after the 2020 acquisition could provide valuable insight into changes in support and strategy.
- Your attorney can help you understand the implications of investing with a newer ownership group operating an established brand.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. A 'fad' business is one based on a short-lived trend rather than sustained consumer demand. Investing in a fad carries the risk of business failure once public interest wanes, even though your contractual obligations to the franchisor would continue. Evaluating a concept's long-term market relevance is a key piece of due diligence.
Potential Mitigations
- To assess long-term viability, it is wise to consult with a business advisor to research market trends and consumer demand for the products.
- Evaluating the franchisor's commitment to ongoing research and development with your financial advisor can provide insight into its adaptability.
- Your attorney can review the franchise agreement to see how much flexibility you have to adapt to changing local tastes.
Inexperienced Management
Medium Risk
Explanation
Item 2 lists the business experience of the management team. The key executives appear to have significant experience with the parent company, Capriotti's Sandwich Shop, and other major brands like Papa John's and Sonic. However, their tenure specifically with the Wing Zone brand dates from the December 2020 acquisition. While they have industry experience, their history managing this particular system is relatively short, which presents a moderate risk.
Potential Mitigations
- A business advisor can assist you in researching the track record and reputation of the executives mentioned in Item 2 at their prior companies.
- When speaking with franchisees, ask specific questions about their interactions with and confidence in the current management team.
- Your attorney can help you understand how the management's relatively recent arrival might impact system stability and support.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package. WZ Franchise, LLC's ultimate parent is Capriotti’s Sandwich Shop, Inc., which appears to be an operator rather than a traditional private equity firm focused on short-term financial engineering. However, the general risk with any outside ownership is the potential for decisions that prioritize investor returns over the long-term health of the franchise system, which is something to remain aware of.
Potential Mitigations
- It is beneficial to research the ownership structure and history of the parent company with your business advisor.
- Understanding the franchisor's right to sell or assign the franchise system should be discussed with your attorney.
- Talking to existing franchisees about their experience under the current ownership provides valuable real-world context.
Non-Disclosure of Parent Company
Low Risk
Explanation
The FDD discloses that the franchisor, WZ Franchise, LLC, is a subsidiary of Wing Zone Holdings, LLC, which is ultimately controlled by Capriotti's Sandwich Shop, Inc. The FDD provides the audited financials for the parent, Wing Zone Holdings, LLC, along with its guarantee of performance. This appears to meet disclosure requirements, as the financially responsible parent's information is provided, although those financials themselves present a separate, significant risk.
Potential Mitigations
- Your attorney should confirm that the provided parent company guarantee is legally sufficient and enforceable in your state.
- An accountant must review the provided parent financials, as they are the basis for the performance guarantee.
- Understanding the full corporate structure and the relationships between the entities is a task for your business advisor.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. The FDD discloses that the current franchisor entity was acquired in December 2020 and that the brand has operated since 1998. It does not list any formal predecessors from which it acquired the system's assets, as the acquisition appears to have been of the corporate entity itself. Therefore, there are no predecessor history issues to report.
Potential Mitigations
- A careful review of Item 1 with your attorney will help clarify the franchisor's history and any predecessors.
- If predecessors are listed, your business advisor can help you research their history and reputation.
- When speaking with long-term franchisees, asking about their experiences under any previous ownership can provide important context.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified in the FDD package. Item 3 of the FDD states, "No litigation is required to be disclosed in this Item." The absence of reported litigation against the franchisor involving fraud, misrepresentation, or franchise law violations is a positive indicator. However, this does not guarantee a dispute-free relationship and does not cover litigation that is not material or outside the scope of Item 3 disclosure requirements.
Potential Mitigations
- Your attorney should still review the dispute resolution clauses in the Franchise Agreement, as this governs how future conflicts would be handled.
- Speaking with current and former franchisees is a good way to discover any unreported disputes or general dissatisfaction, a task for your business advisor.
- An accountant can help you assess financial risks that could lead to future disputes, such as unclear fee structures.
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
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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
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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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