Goodcents
Food and Beverage
Founded 199166 locationsCompany Profile
Year Founded:1991
Goodcents Franchise Cost
| Franchise Fee: | $22,500Key Metric |
| Total Investment: | $329,000 - $465,000Key Metric |
| Liquid Capital: | $75,000 |
| Royalty Fee: | 6% of gross sales |
| Marketing Fee: | 4% of gross sales |
Quick ROI Calculator
Based on Goodcents's actual financial data
Outlet Counts by Year
Historical outlet data extracted from FDD documents
Total US Locations:66
Scale relative to 1,000 locations
Franchised Units:65
Corporate Units:1
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AI-Powered Due Diligence Analysis
Our advanced AI analyzes Franchise Disclosure Documents (FDDs) to identify potential risks and opportunities across 10 critical categories.
12
High Risk
Critical items
30% of total
24
Medium Risk
Monitor closely
60% of total
4
Low Risk
Manageable items
10% of total
40
Total Items
Factors analyzed
10 categories
6.00
Overall Score
Low RiskHigh Risk
010
Franchisor Stability Risks
6 risks identified
2
3
1
Limited Operating History of Key Executives
Medium
Explanation:
- Several key executives, including the CFO, Executive Director, Director of Field Operations, Director of Restaurant Development, and Marketing Manager, have limited experience with Goodcents. This raises concerns about their ability to effectively manage their respective departments and contribute to the overall success of the franchise system.
- Specifically, high turnover or short tenures in key positions can indicate instability and potential inconsistencies in strategic direction.
Potential Mitigations:
- Carefully review the executives' backgrounds and experience in similar roles or industries. Assess their qualifications and track record to determine if their skills are transferable and relevant to the Goodcents business model.
- Inquire about the franchisor's succession planning and training programs for new executives. A robust plan can mitigate the risks associated with leadership changes.
- Seek feedback from existing franchisees about their interactions with these executives and their perceived competence.
FDD Citations:
- Item 2: Details the employment history of key executives, revealing relatively short tenures in their current roles with Goodcents.
Dependence on Affiliated Suppliers
Medium
Explanation:
- Goodcents relies on its affiliate, Custom Foods, Inc., for frozen bread dough and cookies. This dependence creates a potential risk if Custom Foods experiences production issues, quality control problems, or pricing disputes. Such disruptions could negatively impact franchisees' ability to operate their restaurants effectively.
Potential Mitigations:
- Inquire about the franchisor's contingency plans in case of disruptions at Custom Foods. Determine if alternative suppliers are available and if there are agreements in place to ensure a consistent supply of necessary ingredients.
- Review the franchise agreement to understand the terms related to sourcing ingredients and the franchisor's obligations regarding supply chain management.
- Research Custom Foods' reputation and financial stability to assess the long-term viability of this supplier.
FDD Citations:
- Item 1: "Our affiliate, Custom Foods, Inc., (“Custom Foods”) is a Kansas corporation... is an approved manufacturer of frozen bread dough and cookies that are sold to our approved suppliers."
Reliance on Proprietary Software
Medium
Explanation:
- Franchisees are required to use proprietary software and hardware provided by InfoKING Systems, LLC, another Goodcents affiliate. This dependence can create risks related to system downtime, software glitches, cybersecurity vulnerabilities, and pricing increases imposed by InfoKING.
Potential Mitigations:
- Investigate InfoKING's track record of system reliability and customer support. Speak with existing franchisees about their experiences with the software and hardware.
- Review the terms of the agreement with InfoKING regarding fees, upgrades, and support services.
- Inquire about data security measures and disaster recovery plans in place to protect franchisee data and ensure business continuity in case of system failures.
FDD Citations:
- Item 1: "Our affiliate, InfoKING Systems, LLC, (“InfoKING”) ... provides proprietary software and computer system hardware to franchisees on a subscription basis."
Highly Competitive Market
High
Explanation:
- The FDD acknowledges that the sandwich and pasta market is "well-developed and highly competitive." This intense competition from both established franchise brands and independent restaurants can make it challenging for new Goodcents franchisees to attract and retain customers, potentially impacting profitability.
Potential Mitigations:
- Thoroughly research the local market demographics and competition in your target area. Identify any unique selling propositions that differentiate Goodcents from other restaurants.
- Develop a strong local marketing plan to build brand awareness and attract customers.
- Carefully evaluate the franchisor's marketing and advertising support to ensure it is adequate for the competitive landscape.
FDD Citations:
- Item 1: "The primary market for sandwiches and pasta meals is the general public. The market is well-developed and highly competitive."
Fluctuating Unit Count
Low
Explanation:
- While the overall number of Goodcents units has remained relatively stable, Item 20 shows a slight fluctuation in franchise units over the past few years. This could indicate challenges in franchisee retention or difficulties in attracting new franchisees.
Potential Mitigations:
- Analyze the reasons behind the unit fluctuations. Inquire about franchisee turnover rates and the franchisor's efforts to support struggling franchisees.
- Speak with existing and former franchisees to understand their experiences and reasons for leaving the system (if applicable).
FDD Citations:
- Item 20, Table 1: Shows the number of franchised units at the start and end of each year from 2022 to 2024, revealing a net change of +2, -1, and +1, respectively.
Potential for Franchisor Conflict of Interest
High
Explanation:
- The Chairman of the Board owns a Goodcents restaurant, which creates a potential conflict of interest. Decisions made by the franchisor could benefit the Chairman's own restaurant at the expense of franchisees. This could manifest in preferential treatment regarding marketing, site selection, or access to resources.
Potential Mitigations:
- Carefully review the franchise agreement for any clauses addressing conflicts of interest and how they will be handled.
- Seek legal counsel to understand the implications of this conflict and any potential recourse for franchisees in case of unfair practices.
- Communicate with existing franchisees to gauge their perception of any potential bias or preferential treatment.
FDD Citations:
- Item 1: "Our Chairman of the Board owns one GOODCENTS RESTAURANT, which is similar to the Franchise offered you."
Disclosure & Representation Risks
3 risks identified
1
2
Reliance on Related Party Transactions
Medium
Explanation:
- The franchisor has significant related party transactions, including accounts receivable and payable. This can create conflicts of interest and may not reflect arm's-length transactions, potentially impacting the franchisor's financial health.
Potential Mitigations:
- Carefully review all related party transactions disclosed in the FDD to understand their nature and potential impact.
- Consult with a financial advisor to assess the implications of these transactions on the franchisor's financial stability.
- Inquire about the terms and conditions of these related party transactions and compare them to market rates.
FDD Citations:
- Exhibit A, Balance Sheets: Shows related party receivables and payables.
Going Concern Uncertainty
High
Explanation:
- The auditor's report mentions management's responsibility to evaluate going concern status. This suggests potential financial difficulties that could threaten the franchisor's ability to continue operating, impacting franchisee support and system stability.
Potential Mitigations:
- Directly ask the franchisor about any going concern issues and their plans to address them.
- Consult with a legal and financial advisor to assess the potential risks and implications.
- Review the franchisor's financial statements for trends indicating financial distress.
FDD Citations:
- Exhibit A, Independent Auditor's Report: Mentions management's responsibility for evaluating going concern.
Dependence on Franchise Fees and Royalties
Medium
Explanation:
- While not explicitly stated, franchisors typically rely heavily on franchise fees and royalties. A decline in new franchise sales or struggling franchisees could significantly impact the franchisor's revenue and ability to provide support.
Potential Mitigations:
- Analyze Item 2 and other relevant items to understand the franchisor's revenue streams and dependence on franchise fees and royalties.
- Research the franchise system's growth trajectory and the performance of existing franchisees.
- Inquire about the franchisor's plans for future growth and diversification of revenue.
FDD Citations:
- Exhibit A (Implied): Financial statements would reflect revenue from franchise fees and royalties, though not always broken down specifically.
Financial & Fee Risks
3 risks identified
1
2
Financial Instability of Franchisor (Illinois)
High
Explanation:
- The FDD states that the Illinois Attorney General's Office requires Goodcents to defer all initial franchise fees until the franchisee's first location is open. This requirement is due to Goodcents' financial condition and suggests potential instability or difficulty meeting initial obligations.
- This deferred payment structure creates uncertainty for the franchisee, as it indicates the franchisor may not have sufficient capital to support new franchisees during the initial setup phase.
Potential Mitigations:
- Thoroughly investigate Goodcents' financial statements and discuss the reasons for the deferred fees with the franchisor and existing franchisees in Illinois.
- Consult with a financial advisor to assess the franchisor's financial health and the potential impact of this deferred payment structure on your investment.
- Secure additional funding sources to cover initial expenses and potential delays in receiving support from the franchisor.
FDD Citations:
- Cover Page, Item 5, Item 7, and Article VI: "Based on our financial condition, the Illinois Attorney General's Office, has required that all initial fees be deferred..."
Limited Legal Recourse (Various States)
Medium
Explanation:
- The FDD includes several clauses related to governing law, dispute resolution, and waivers that may be unenforceable in certain states like Illinois and North Dakota. This creates legal uncertainty and could limit your ability to pursue legal action against the franchisor in your jurisdiction.
- Specific examples include limitations on choice of law, venue, waivers of jury trials, and limitations on damages.
Potential Mitigations:
- Carefully review the state-specific addenda in Exhibit G and consult with an attorney specializing in franchise law in your state to understand the implications of these clauses.
- Negotiate with the franchisor to remove or modify any clauses that are unenforceable or unfavorable to you under your state's laws.
FDD Citations:
- Illinois Addendum: References to Sections 4, 41, and Rule 608 of the Illinois Franchise Disclosure Act regarding litigation and governing law.
- North Dakota Addendum: References to Section 51-19-09 of the North Dakota Franchise Investment Law regarding dispute resolution, choice of law, liquidated damages, jury trial waivers, and punitive damage waivers.
Unclear Initial Investment
Medium
Explanation:
- Item 2 states that the provided costs do not include the initial franchise fee or opening costs, directing the reader to Item 7. This creates confusion and makes it difficult to quickly understand the full initial investment required.
Potential Mitigations:
- Carefully review Item 7 (Estimated Initial Investment) to understand the complete range of startup costs.
- Create a comprehensive budget that includes all potential expenses, including those not explicitly mentioned in Item 2.
- Consult with existing franchisees to get a realistic understanding of actual startup costs.
FDD Citations:
- Item 2: "The total above does not include costs for initial franchise fee or opening a Restaurant. Please refer to Item 7..."
Legal & Contract Risks
7 risks identified
2
3
2
Washington State Franchise Act Superseding Franchise Agreement
Medium
Explanation:
- The FDD repeatedly states that Washington's Franchise Investment Protection Act (FIPA), RCW 19.100.180, and related court decisions may supersede the Franchise Agreement, particularly regarding termination and renewal.
- This creates uncertainty about the enforceability of certain provisions in the Franchise Agreement and could lead to disputes.
Potential Mitigations:
- Carefully review RCW 19.100.180 and relevant case law to understand the potential discrepancies between the Act and the Franchise Agreement.
- Consult with a franchise attorney specializing in Washington law to assess the specific implications for your franchise.
- Seek clarification from the franchisor on how they intend to navigate potential conflicts between the Agreement and Washington FIPA.
FDD Citations:
- Item 17: "The state of Washington has a statute, RCW 19.100.180, which may supersede the Franchise Agreement..."
- Article VIII, Section 3: Similar wording regarding RCW 19.100.180.
Mandatory Arbitration Venue in Washington
Low
Explanation:
- For franchises purchased in Washington, the arbitration site must be in Washington or a mutually agreed upon location, potentially increasing travel costs and logistical challenges for franchisees outside of Washington.
Potential Mitigations:
- Factor potential travel costs associated with arbitration in Washington into your budget.
- If arbitration becomes necessary, negotiate firmly for a mutually agreeable location closer to your franchise.
FDD Citations:
- Item 17: "In any arbitration involving a Franchise purchased in Washington, the arbitration site shall be either in Washington or in a place as mutually agreed upon..."
Restrictions on Release of Rights Under Washington FIPA
Medium
Explanation:
- The FDD states that a release of rights by a franchisee does not include rights under Washington FIPA except in specific circumstances (negotiated settlement with independent counsel).
- This limits the franchisor's ability to enforce waivers and protects franchisees' rights under Washington law.
Potential Mitigations:
- Understand your rights under Washington FIPA and ensure any release you sign complies with the law.
- Consult with an attorney before signing any release or waiver.
FDD Citations:
- Item 17: "A release or waiver of rights executed by a franchisee shall not include rights under the Washington Franchise Investment Protection Act..."
General Release Requirement for Renewals (Maryland)
High
Explanation:
- The FDD requires franchisees in Maryland to sign a general release of all claims against the franchisor as a condition of renewal.
- This could prevent franchisees from pursuing legitimate claims related to the franchise agreement.
Potential Mitigations:
- Carefully review the release language and negotiate to remove or modify overly broad provisions.
- Consult with an attorney specializing in franchise law in Maryland before signing any release.
- Document all potential claims or disputes before signing the renewal agreement and release.
FDD Citations:
- Exhibit H: General Releases (For renewal franchise): "Releasors hereby release Releasees (including Franchisor) from any and all claims..."
General Release Requirement for Transfers (Maryland)
Medium
Explanation:
- Similar to the renewal release, a general release is required for transfers in Maryland, potentially limiting recourse for the selling franchisee.
Potential Mitigations:
- Negotiate the terms of the release with the franchisor and the buying franchisee.
- Consult with legal counsel before signing the transfer agreement and release.
FDD Citations:
- Exhibit H: General Releases (Transfer): "...mutually release each other from claims and liabilities of any sort arising out of or relating to...the Franchise Agreement..."
Transfer Fees Limited to Reasonable Costs
Low
Explanation:
- The FDD states that transfer fees are limited to the franchisor's reasonable estimated or actual costs.
- This provides some protection against excessive transfer fees but leaves room for interpretation of what constitutes "reasonable" costs.
Potential Mitigations:
- Request a detailed breakdown of the transfer fee calculation from the franchisor.
- Compare the fee to industry averages and other franchise systems.
- Negotiate the fee if it seems unreasonable.
FDD Citations:
- Item 17: "Transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated or actual costs..."
Wisconsin Fair Dealership Law Supersedes Franchise Agreement
Medium
Explanation:
- The FDD states that Wisconsin's Fair Dealership Law supersedes any conflicting provisions in the Franchise Agreement.
- This creates uncertainty about the enforceability of certain provisions and could lead to disputes.
Potential Mitigations:
- Review Wisconsin's Fair Dealership Law and consult with an attorney specializing in Wisconsin franchise law to understand the potential implications.
- Seek clarification from the franchisor on how they intend to handle potential conflicts between the Agreement and Wisconsin law.
FDD Citations:
- Exhibit G: State Addenda (Wisconsin): "The Wisconsin Fair Dealership Law, Chapter 135 of the Wisconsin Statutes supersedes any provision of the Franchise Agreement..."
Territory & Competition Risks
3 risks identified
1
2
No Exclusive Territory
High
Explanation:
- Goodcents does not offer exclusive territories. This means franchisees may face direct competition from other Goodcents franchisees, corporate-owned locations, and alternative distribution channels controlled by the franchisor.
- This significantly increases the risk of market saturation and cannibalization, potentially impacting sales and profitability.
Potential Mitigations:
- Thoroughly research the existing and planned Goodcents locations in your target market. Evaluate the competitive landscape and assess the potential for market saturation.
- Discuss your concerns with existing franchisees and inquire about their experiences with intra-brand competition.
- Negotiate with the franchisor for a protected radius or other assurances regarding future development in your immediate vicinity, although the FDD suggests this is unlikely.
FDD Citations:
- Item 12, Territory: "You will not be granted an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands we control."
Competition from Other Channels
Medium
Explanation:
- The franchisor reserves the right to sell Goodcents products through various channels, including online, non-traditional locations (airports, stadiums, etc.), and other retail partnerships. This could create competition for franchisees and potentially divert sales.
Potential Mitigations:
- Carefully review Item 12 to understand the full extent of the franchisor's multi-channel strategy. Assess the potential impact on your business based on your target market.
- Inquire about the franchisor's plans for future channel expansion and how they intend to manage potential conflicts with franchisees.
FDD Citations:
- Item 12, Reservation of Rights (Multi-Unit and Single Unit): Lists various alternative distribution channels the franchisor may utilize.
Development Area Encroachment (Multi-Unit)
Medium
Explanation:
- While multi-unit agreements define a Development Area, the franchisor retains significant control and can restrict development near the perimeter if it deems it necessary to protect other markets. This limits the franchisee's flexibility within their designated area.
Potential Mitigations:
- Clearly understand the boundaries and restrictions of your Development Area. Discuss potential development limitations with the franchisor before signing the agreement.
- Negotiate for greater clarity and flexibility regarding development near the perimeter of your area.
FDD Citations:
- Item 12, Multi-Unit Agreement: "We may prohibit you from locating a Restaurant too close to the perimeter of your Development Area...in our sole discretion."
Regulatory & Compliance Risks
3 risks identified
2
1
Food Safety and Handling Regulations Compliance
High
Explanation:
- Failure to comply with stringent food safety and handling regulations from agencies like the FDA and USDA can lead to severe consequences, including temporary closure, legal action, reputational damage, and franchise termination.
- Regulations cover various aspects, including food preparation, storage, handling, and waste disposal, requiring meticulous attention to detail and ongoing training.
Potential Mitigations:
- Develop and implement a comprehensive food safety management system based on HACCP principles.
- Provide thorough training to all employees on food safety procedures and ensure regular refresher courses.
- Conduct regular internal audits and self-inspections to identify and address potential issues proactively.
- Establish a strong relationship with local health inspectors and seek their guidance on compliance matters.
FDD Citations:
- Item 1: "Your Restaurant will be subject to federal, state, and local regulations and guidelines governing the food service industry... including any federal, state, county and local health and consumer protection laws and regulations concerning food preparation, handling, and storage..."
Labor and Employment Law Compliance
High
Explanation:
- Non-compliance with federal, state, and local labor laws, including minimum wage, overtime, anti-discrimination, and anti-harassment laws, can result in costly lawsuits, penalties, and damage to the franchise's reputation.
- The restaurant industry often faces scrutiny regarding wage and hour violations, making strict adherence to these regulations crucial.
Potential Mitigations:
- Implement robust HR policies and procedures that comply with all applicable labor laws.
- Provide comprehensive training to managers and employees on labor law compliance, including anti-discrimination and anti-harassment training.
- Maintain accurate records of employee hours worked, wages paid, and other relevant employment information.
- Consult with legal counsel specializing in labor and employment law to ensure ongoing compliance.
FDD Citations:
- Item 1: "You must also be aware of federal, state, and local labor and employment laws and regulations, including without limitation minimum age, and minimum wage and overtime laws and laws prohibiting harassment, discrimination, and retaliation."
Truth in Menu Compliance
Medium
Explanation:
- Misrepresenting menu items, ingredients, or nutritional information can lead to consumer complaints, legal action, and reputational damage.
- Regulations require accurate descriptions of dishes, including ingredients, allergens, and nutritional content.
Potential Mitigations:
- Ensure all menu descriptions are accurate and comply with relevant "Truth in Menu" regulations.
- Provide clear and accessible information about allergens and nutritional content.
- Regularly review and update menu information to reflect any changes in ingredients or preparation methods.
FDD Citations:
- Item 1: "'Truth in Menu' regulations concerning menu items names and product labeling, nutritional claims..."
Franchisor Support Risks
3 risks identified
3
Limited Franchisor Support Beyond Initial Setup
Medium
Explanation:
- The FDD states "Except as listed below, GOODCENTS is not required to provide you with any assistance." This suggests limited ongoing support beyond the initial setup phase, potentially leaving franchisees to navigate challenges independently.
- While initial training and materials are provided, the extent of ongoing operational, marketing, and strategic guidance is unclear, potentially hindering long-term growth and profitability.
Potential Mitigations:
- Thoroughly review the listed support elements in Item 11 to understand the scope and limitations of franchisor assistance.
- Inquire about the availability of additional support programs or resources beyond those explicitly mentioned in the FDD.
- Seek clarification on the franchisor's approach to addressing operational challenges, market changes, and emerging industry trends.
FDD Citations:
- Item 11, Beginning: "Except as listed below, GOODCENTS is not required to provide you with any assistance."
Site Selection and Development Burden
Medium
Explanation:
- The franchisee is fully responsible for site selection, procurement, and development, including adherence to local ordinances and building codes. This places a significant burden on the franchisee, particularly those without prior real estate or development experience.
- While the franchisor approves the site, the franchisee bears the financial and logistical risks associated with securing and developing the location.
Potential Mitigations:
- Engage experienced real estate professionals to assist with site selection, negotiation, and due diligence.
- Consult with legal counsel specializing in commercial real estate to ensure compliance with local regulations and lease agreements.
- Develop a detailed budget and timeline for site development to manage costs and ensure timely completion.
FDD Citations:
- Item 11, Pre-Opening Obligations, Point 1 & 2: "We are not responsible for the location, selection, procurement, and development of a site...You are responsible for conforming your Restaurant site to local ordinances and building codes and obtaining any required permits..."
Strict Timelines for Site Acquisition and Restaurant Opening
Medium
Explanation:
- The FDD specifies strict timelines for site acquisition (90-120 days after approval) and restaurant opening (180 days from the Franchise Agreement date). Failure to meet these deadlines can result in termination of the agreement.
- These tight deadlines can create pressure and increase the risk of costly delays, especially considering the complexities of real estate transactions and construction projects.
Potential Mitigations:
- Begin site selection and negotiation well in advance of signing the Franchise Agreement.
- Secure financing and necessary permits early in the process to avoid delays.
- Include contingency plans in the development timeline to account for unforeseen circumstances.
FDD Citations:
- Item 11, Pre-Opening Obligations, Point 2: "If you fail to obtain lawful possession of an approved site within 90-120 days...we may withdraw approval...You must develop and open your Restaurant...within 180 days...Failure to open within the timing requirements may result in the termination of your Franchise Agreement."
- Item 11, Time to Open: "Failure to develop and open your Restaurant within 180 to 365 days...may result in the termination of your Franchise Agreement."
Exit & Transfer Risks
6 risks identified
2
3
1
Washington State Franchise Act Superseding Franchise Agreement
Medium
Explanation:
- The FDD states that Washington's Franchise Investment Protection Act (FIPA), RCW 19.100.180, and related court decisions may supersede the Franchise Agreement regarding termination and renewal. This creates uncertainty about the enforceability of certain contract provisions.
- While providing additional protections for franchisees in Washington, it also introduces complexity in understanding the interplay between the agreement and state law.
Potential Mitigations:
- Carefully review RCW 19.100.180 and relevant case law to understand the specific provisions that may override the Franchise Agreement.
- Consult with a franchise attorney specializing in Washington law to assess the potential impact on your rights and obligations.
- Factor the potential impact of FIPA into your business plan, particularly regarding exit strategies and renewal expectations.
FDD Citations:
- Item 17 Amendment: "The state of Washington has a statute, RCW 19.100.180, which may supersede the Franchise Agreement..."
- Article VIII, Section 3 Amendment: "The state of Washington has a statute, RCW 19.100.180 which may supersede the franchise agreement..."
Restrictions on Release of Rights Under Washington FIPA
Medium
Explanation:
- The FDD indicates that a franchisee's release of rights does not include rights under Washington's FIPA unless executed under specific conditions (negotiated settlement, representation by independent counsel). This limits the franchisor's ability to obtain broad releases from franchisees in Washington.
- This could potentially expose the franchisor to future claims even after a franchisee has signed a release.
Potential Mitigations:
- Understand the limitations on releases under Washington FIPA.
- Consult with legal counsel before signing any release or settlement agreement.
FDD Citations:
- Item 17 Amendment: "A release or waiver of rights executed by a franchisee shall not include rights under the Washington Franchise Investment Protection Act..."
Transfer Fee Limitations in Washington
Low
Explanation:
- The FDD specifies that transfer fees are limited to the franchisor's reasonable estimated or actual costs in Washington. This protects franchisees from excessive transfer fees but may also impact the franchisor's revenue from transfers.
Potential Mitigations:
- Request a detailed breakdown of transfer costs from the franchisor.
- Negotiate the transfer fee if it appears unreasonable.
FDD Citations:
- Item 17 Amendment: "Transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer."
Required General Release Upon Renewal (Maryland)
High
Explanation:
- The FDD requires franchisees in Maryland to execute a general release of all claims against the franchisor and its affiliates as a condition of renewal. This could prevent franchisees from pursuing legitimate claims related to the franchise relationship.
- While the release excludes claims under the Maryland Franchise Registration and Disclosure Law, it covers a broad range of other potential claims.
Potential Mitigations:
- Carefully review the release language with legal counsel before signing.
- Negotiate with the franchisor to narrow the scope of the release if possible.
- Document any existing issues or concerns before signing the renewal agreement and release.
FDD Citations:
- Exhibit H: General Releases (Renewal): "Releasors hereby release Releasees (including Franchisor) from any and all claims..."
Required General Release Upon Transfer (Maryland)
Medium
Explanation:
- Similar to the renewal release, the FDD requires a general release of claims upon transfer of the franchise in Maryland. This could limit the selling franchisee's ability to pursue claims against the franchisor.
Potential Mitigations:
- Carefully review the release language with legal counsel.
- Negotiate with the franchisor to limit the scope of the release.
- Address any outstanding issues with the franchisor before the transfer.
FDD Citations:
- Exhibit H: General Releases (Transfer): "...mutually release each other from claims and liabilities of any sort arising out of or relating to... the Franchise Agreement..."
Wisconsin Fair Dealership Law Superseding Franchise Agreement
Medium
Explanation:
- The FDD states that Wisconsin's Fair Dealership Law supersedes any conflicting provisions in the Franchise Agreement. This introduces uncertainty about the enforceability of certain contract terms and may provide additional protections for franchisees in Wisconsin.
Potential Mitigations:
- Review Wisconsin's Fair Dealership Law to understand its provisions and potential impact on the franchise relationship.
- Consult with a franchise attorney specializing in Wisconsin law.
FDD Citations:
- Exhibit G: State Addenda (Wisconsin): "The Wisconsin Fair Dealership Law, Chapter 135 of the Wisconsin Statutes supersedes any provision of the Franchise Agreement if such provision is in conflict with that law."
Operational & Brand Risks
3 risks identified
3
Limited Control over Site Selection and Development
Medium
Explanation:
- While Goodcents approves the site, the franchisee is responsible for locating, securing, and developing it. This puts a significant burden on the franchisee, who may lack experience in real estate, construction, and local regulations.
- Delays in site acquisition or development can lead to cost overruns and delayed opening, impacting profitability.
- Failure to secure a suitable site can negatively impact long-term success.
Potential Mitigations:
- Engage experienced real estate professionals specializing in restaurant site selection.
- Develop a detailed project plan with realistic timelines and contingency plans for delays.
- Secure financing specifically for site acquisition and development.
- Consult with local authorities early in the process to understand zoning and permitting requirements.
FDD Citations:
- Item 11: "We are not responsible for the location, selection, procurement, and development of a site for your Restaurant."
- Item 11: "Site selection requires our written approval."
Mandatory Participation in Advertising Cooperatives
Medium
Explanation:
- Franchisees are required to join and contribute to advertising cooperatives, even if they perceive the campaigns as ineffective or irrelevant to their local market.
- The franchisor has sole discretion over the formation, operation, and dissolution of cooperatives, potentially leading to conflicts of interest.
- Lack of transparency in cooperative fund management could raise concerns about efficient use of resources.
Potential Mitigations:
- Carefully review the FDD for details on advertising cooperative structure, contribution requirements, and decision-making processes.
- Engage with other franchisees to understand their experiences with the cooperatives and advocate for greater transparency and local control.
- Request regular reports on cooperative fund expenditures and campaign performance.
FDD Citations:
- Item 11: "You must join and participate in any advertising cooperatives we designate."
- Item 11: "We may form, change, or dissolve any advertising cooperative in our sole discretion."
Dependence on Franchisor's Operational Systems and Support
Medium
Explanation:
- Franchisees are heavily reliant on the franchisor for operational procedures, training, and ongoing support.
- Any deficiencies in these areas, such as inadequate training or outdated systems, can directly impact the franchisee's ability to operate efficiently and profitably.
- Changes in franchisor's strategies or support systems can disrupt operations and require significant adjustments by the franchisee.
Potential Mitigations:
- Thoroughly evaluate the franchisor's training program, operational manuals, and support infrastructure during due diligence.
- Seek feedback from existing franchisees about the quality and effectiveness of franchisor support.
- Develop strong internal operational capabilities and contingency plans to mitigate reliance on franchisor support.
FDD Citations:
- Item 11: "We will provide you with operating assistance which may include, without limitation…"
- Item 11: "…you must or may buy or lease the required items from approved suppliers."
Performance & ROI Risks
3 risks identified
1
2
No Earnings Claims
Medium
Explanation:
- The FDD explicitly states that no claims, representations, or warranties regarding earnings, sales, profits, or business success have been made. This lack of financial performance information makes it difficult to project potential ROI and increases the uncertainty of financial success.
- Item 25B reinforces this by stating the Franchisor makes no representations about potential earnings or profits.
Potential Mitigations:
- Conduct thorough independent market research in your target area to assess demand and potential revenue.
- Interview existing franchisees to gain insights into their financial performance and operational challenges. Focus on franchisees with similar demographics and market conditions.
- Develop realistic financial projections based on conservative estimates and industry benchmarks. Consult with a financial advisor to assess the feasibility of your business plan.
FDD Citations:
- Item 19: "Franchisee represents and warrants to Franchisor that no claims, representations or warranties regarding the earnings, sales, profits, success or failure of the franchised business have been made to Franchisee..."
- Item 25B: "Franchisee acknowledges that it has entered into this Agreement after making an independent investigation of Franchisor's operations and not upon any representation as to Gross Revenue, volume, potential earnings or profits..."
Speculative Business Venture
High
Explanation:
- The FDD explicitly acknowledges that the success of the franchise is "speculative" and highly dependent on the franchisee's abilities and active participation. This highlights the inherent risk in any new business venture, particularly in the competitive food and beverage industry.
Potential Mitigations:
- Develop a strong business plan with detailed operational strategies and marketing plans.
- Gain relevant experience in the food and beverage industry, either through prior employment or specialized training.
- Secure adequate working capital to cover operating expenses during the initial ramp-up phase and potential slow periods.
- Actively participate in the franchise training program and ongoing support provided by the franchisor.
FDD Citations:
- Item 25A: "The success of the business venture contemplated to be undertaken by this Franchise Agreement is speculative and depends, to a large extent, upon the ability of the Franchisee as an independent businessperson, and the active participation of Franchisee..."
Market Competition
Medium
Explanation:
- The food and beverage industry is inherently competitive. While not explicitly mentioned in the provided sections, competition from other Goodcents franchises, other sub shops, and restaurants in general poses a significant risk to profitability.
Potential Mitigations:
- Carefully evaluate the competitive landscape in your target market before selecting a location.
- Differentiate your franchise through excellent customer service, local marketing initiatives, and potentially offering unique menu items or promotions (within the franchise agreement).
- Focus on building a strong local presence and community involvement.
FDD Citations:
- No specific citation, but this is a general risk in the food and beverage industry.
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FDD Year: 2025
Uploaded: 8/9/2025
FDD Year: 2024
Uploaded: 8/25/2025
FDD Documents
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