Sample FDD Summary

Executive Summary

Acme Burger Co. presents a moderately priced franchise opportunity with initial investment requirements in line with fast-casual industry norms. The royalty and advertising fees are at industry median. Item 19 discloses financial performance data from 78% of franchisees - a strong sample size - with median unit revenue of $850,000. Franchisee turnover is below average at 3.5%, suggesting operational stability and franchisee satisfaction.

Primary considerations: (1) The technology fee is above industry median at $3,500 initial vs. $2,000 median; (2) the estimated initial investment range is wide ($385K-$625K), indicating significant location-dependent cost variance; (3) territory exclusivity language warrants careful review before signing.

Item 5 - Initial Fees

All fees paid to the franchisor before opening. These are separate from the broader initial investment (Item 7).

Fee	Amount	Refundable?	Notes
Franchise Fee	$45,000	No	Standard fee for single unit
Training Fee	$5,000	No	Covers 3-week initial training program
Technology Fee (Initial)	$3,500	No	POS setup + first year software license
Total Initial Fees	$53,500	-	-

▲ Medium Risk

Technology fee above industry median

"The Initial Technology Fee covers setup of the proprietary POS system and first-year software maintenance. Additional annual software fees apply as detailed in Item 6." - Item 5, Section 3

Industry median initial technology fee: $2,000. Acme charges $3,500 - 75% above median. Ongoing technology fees (Item 6) add further cost.

✓ Low Risk

Franchise fee within normal range for fast-casual segment

Industry range: $25,000-$60,000. Acme's $45,000 falls within the upper-middle of typical ranges.

Item 6 - Ongoing Fees

Recurring fees owed to the franchisor during operations. These directly impact unit economics.

Fee	Rate / Amount	Basis
Royalty Fee	6%	Gross sales, weekly
Advertising Fund	2%	Gross sales, weekly
Technology Fee (Ongoing)	$500/month	Fixed monthly
Local Marketing Requirement	1%	Gross sales minimum spend
Total Variable Fees	~9%	Plus $500/mo fixed

✓ Low Risk

Royalty rate at industry median for fast-casual

Fast-casual industry royalty range: 4-8%. Acme at 6% is at the median. Total fees of ~9% plus $500/month are standard for the segment.

▲ Medium Risk

Combined fee burden of ~9% leaves limited margin at lower revenue units

At median revenue of $850,000 (Item 19), fees total approximately $76,500/year plus $6,000 in technology fees. Units below $600,000 in revenue may face significant margin pressure.

Item 7 - Estimated Initial Investment

Total estimated cost to open one franchise unit, from signing through opening day.

Category	Low Estimate	High Estimate
Initial Fees (Item 5)	$53,500	$53,500
Real Estate / Lease Deposit	$15,000	$50,000
Build-Out / Construction	$150,000	$280,000
Equipment	$80,000	$120,000
Signage	$8,000	$18,000
Initial Inventory	$12,000	$20,000
Working Capital (3 months)	$25,000	$45,000
Miscellaneous / Training Travel	$8,500	$15,000
Total Investment Range	$352,000	$601,500

▲ Medium Risk

Wide investment range indicates significant location-dependent cost variance

"The estimated initial investment set forth in this Item 7 reflects cost ranges based on franchisees who opened units between January 2023 and December 2024." - Item 7, Introduction

The $249,500 gap between low and high estimates (71% variance) is above-average. Buyers should model multiple scenarios and require franchisor guidance on expected costs for their specific market.

✓ Low Risk

Working capital provision appears adequate

3-month working capital at $25,000-$45,000 is standard for fast-casual. Some brands understate this; Acme's range is reasonable.

Item 19 - Financial Performance Representations

Data on how franchisees actually perform. Acme does include Item 19 data - 40% of FDDs omit this section entirely.

Metric	Value	Notes
Units Reporting	267 of 342 (78%)	Mature units operating 12+ months
Median Annual Revenue	$850,000	-
Top Quartile Revenue	$1,200,000+	25% of reporting units
Bottom Quartile Revenue	Under $620,000	25% of reporting units
Reporting Period	2024 calendar year	-

✓ Low Risk

Strong sample size with 78% of units reporting

Industry standard considers 60%+ reporting as credible. At 78%, Acme's Item 19 data is representative. Median revenue of $850,000 comfortably exceeds typical breakeven estimates of $550,000-$650,000 for this investment level.

▲ Medium Risk

Bottom quartile units may face margin pressure

Units below $620,000 in revenue face combined fees of ~$62,000+ annually. Depending on build-out debt service, these units may operate near breakeven. Buyers should understand what differentiates top and bottom performers before committing.

Item 20 - Outlets and Franchisee Information

Unit count changes reveal whether franchisees are succeeding or exiting the system.

Metric	Year (2024)	Year (2023)
Total Units (End of Year)	342	314
New Units Opened	28	24
Units Closed / Terminated	12 (3.5%)	10 (3.2%)
Units Transferred	8	6
Net Growth	+28 (+9.2%)	+20 (+6.8%)

✓ Low Risk

Below-average closure rate with consistent net growth

"The following table reflects all franchised outlets transferred, cancelled, terminated, reacquired by the franchisor, or not renewed during the most recently completed fiscal year." - Item 20

Industry average closure rate: 5-8% annually. Acme's 3.5% is materially below average. Consistent new openings (+24-28/year) and declining relative closure rates indicate a healthy, growing system.

Overall Risk Assessment

Low Overall Risk

Acme Burger Co. presents below-average risk for the fast-casual segment based on the five analyzed items. The system shows strong unit growth, below-average closure rates, and credible earnings data with good sample coverage. Median unit revenue comfortably exceeds typical breakeven thresholds.

Key items to address with your buyer before proceeding: (1) Technology fee is above industry median - verify this isn't increasing further; (2) Wide initial investment range warrants a market-specific cost analysis; (3) Bottom-quartile revenue units face margin pressure - understand performance drivers before committing.

Note: This summary is for informational purposes only and does not constitute legal or financial advice. Buyers should consult a franchise attorney before signing any franchise agreement.

Acme Burger Co. - FDD Summary

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