Sample report
This is what the $199 report gives you.
Every section below is the real engine output — the same scoring, underwriting, and financial-condition logic that runs on your FDD. Only the disclosure behind it is invented, so nothing here is any franchisor's actual numbers.
Verde Bowls — Diligence Report
Verde Bowls Franchising, LLC · Austin, Texas
Built on the Item 7 mid-point of $530,000. Your capital leaves a $380,000 gap, so the ladder opens financed at that amount — move the slider to model it differently.
Initial Investment (Item 7, p.23)
Estimated total: $340,000 – $720,000
Non-recurring (build-out)
Buyer-Fit Underwriting
With $150,000 liquid against a $530,000 mid-point build-out, there is a $380,000 capital gap. An SBA loan or an equity partner is required to do this deal. At mid-cohort revenue, about $19,638/mo is left after fees, rent and debt service — cost of goods and labor still come out of that, and the cash ladder below subtracts them.
Capital Gap
$380,000
Loan Needed
Yes
Net Worth Req.
Met
After fees, rent & debt
$19,638
That last figure is rung 5 of the ladder minus a debt payment — cost of goods and labor have not come out of it yet. The cash ladder below subtracts them ▾
The cash ladder — Middle 50% — Average
Rungs 1 through 9 are the business. Rung 10 onward is the deal — how you pay for it changes the bottom of this table and nothing above it.
Operating EBITDA — monthly, before debt and owner pay
-$4,202 – $1,918
-$50,424 – $23,016 a year · -10.3% – 4.7% of revenue · at the expensive end of the modeled cost range this unit does not turn an operating profit
| Rung | Monthly | ||
|---|---|---|---|
| 1Gross revenueDISCLOSEDMiddle 50% — Average — disclosed monthly average | $40,800 | ||
How this is calculated Source: Item 19 — Middle 50% — Average (Item 19, p.71) · 21 units · disclosed monthly average Basis: franchised units · gross sales Disclosed figure extracted from the FDD — confirm against the source before relying on it. | |||
| 2− Franchise feesDISCLOSEDItem 6: Royalty 7.5%, Brand fund 2%, Local advertising 1% | $4,284 | ||
| 3− Fixed monthly feesDISCLOSEDItem 6: Technology & POS Fee $350/mo, Supply Chain Access Fee $200/mo | $550 | ||
| 4− Rent & occupancyDISCLOSEDItem 7, p.23 (estimated) | $11,200 | ||
Disclosed — Item 7, p.23 (estimated). | |||
| 5= Margin after fees & rentDERIVEDRungs 1 − 2 − 3 − 4 | $24,766 | ||
Not profit. Cost of goods, labor and operating costs have not been subtracted yet. | |||
| 6− Cost of goodsBENCHMARK28–33% of revenue | $11,424 – $13,464 | ||
| 7− LaborBENCHMARK22–28% of revenue | $8,976 – $11,424 | ||
| 8− Other operating costsBENCHMARK6–10% of revenue | $2,448 – $4,080 | ||
| 9= Operating EBITDABENCHMARKRung 5 − 6 − 7 − 8 | -$4,202 – $1,918 | ||
Before debt service, owner compensation, depreciation and taxes. | |||
| 10− Debt serviceDERIVED$380,000 at 10.5% over 10 years | $5,128 | ||
| 11= Cash after debt, before owner drawBENCHMARKRung 9 − rung 10 | -$9,330 – -$3,210 | ||
The operator has not been paid out of this yet. | |||
| 12Debt-service coverage ratioBENCHMARKRung 9 ÷ rung 10 — operating EBITDA divided by the loan payment | -0.82 – 0.37 | ||
Lenders typically want 1.25 or better: $1.25 of operating profit for every $1.00 of loan payment. | |||
| 13Years to recover the build-outBENCHMARKItem 7 midpoint $530,000 ÷ annual operating EBITDA | 23.0 yrs at best · never at worst | ||
Recovery of the build-out only, and it does not include the operator's own time. At the low end of the modeled cost range the unit does not generate operating profit, so the build-out is never recovered. | |||
Rungs 6, 7 and 8 are QSR / fast-casual category bands. These three rungs are category bands, not this brand's figures — an FDD is not required to disclose cost of goods, labor, or operating costs, and no such figures were read from this one. Item 20 does not carry cost figures either; what it carries is every current franchisee, by name and phone. Call three in markets like yours and ask what they actually run for food cost, labor and rent before you sign. Rung 9 is before the owner's own pay. If you intend to draw a salary, it comes out of rung 11.
How you pay for it
Opens on the plan your own numbers imply: finance the $380,000 gap between your liquid capital and the Item 7 mid-point. Move the slider to model a different structure.
Monthly payment
$5,128
Cash you put in
$150,000
Cash after debt
-$9,330 – -$3,210
Return on your cash
-33.6% – 15.3%
Debt-service coverage
-0.82 – 0.37
Operating EBITDA divided by debt service. Lenders typically want 1.25 or better, and often write it into the loan as a covenant you have to hold every year — not just at closing. At the low end of the modeled cost range there is no coverage at all: the unit does not produce operating profit to cover the payment.
What this unit could support
$113,714
The largest loan that still clears 1.25 coverage at 10.5% over 10 years, using the BEST end of the modeled cost range. At the low end it supports less, and the gap between those two numbers is the conversation to have with your lender.
Ongoing Fees & Hidden Costs
Mandatory Remodel
A full refresh is required every 7 years at your expense; the prior cycle averaged $45,000–$85,000 per location.
(Item 6, p.34)Transfer Fee
Selling your franchise triggers a transfer fee equal to 50% of the then-current initial franchise fee, plus a training fee for the buyer.
(Item 17, p.66)Item 19 — Financial Performance (Item 19, p.71)
◄ Rung 1 of the cash ladder above — the franchised, apples-to-apples number
Figures are franchised units only; company-operated locations are excluded.
Franchise Edge · Insights
Classified as QSR / fast-casual — Fast-casual build-your-own bowls with counter service and a compact kitchen footprint.. An FDD discloses fees and investment, never the franchisee's operating costs. Here is what to budget for and verify.
No margin disclosed in Item 19
No operating-EBITDA margin is disclosed in Item 19. The 10–18% band below is an industry estimate for this concept — validate it against real franchisee P&Ls (Item 20) before relying on any margin.
How to read the numbers below — disclosed vs. estimated
Disclosed = stated in this FDD · Derived = our calculation from disclosed figures · Benchmark = our industry range, because the FDD does not disclose it · Inferred = AI classification
How we get to true operating EBITDA
conventionally staffed · ≈ 2.6–3.3 FTE at ~$20/hr fully loaded
utilities, insurance, repairs & maintenance (category estimate)
≈ -10% to 5% operating margin, before debt
Dollar figures use the midpoint of each category band (the % ranges show the spread); your unit's actuals will vary. Labor headcount implied at ~$20/hr fully loaded. Rent and franchise fees are already inside the margin line above.
These are category benchmarks applied to the disclosed top line — your unit's real costs will differ, and that difference is the conversation. Want them pressure-tested against actual franchisee P&Ls for your territory?
What actually decides the deal: Prime cost and throughput per labor hour. Smaller footprint helps fixed costs, but COGS + labor still set the ceiling.
Ramp: 3–6 months to run-rate once open.
Critical considerations — QSR / fast-casual
- ›Budget COGS ~28–33% and labor ~22–28%; target prime cost under ~60%.
- ›Verify average ticket and daily transaction counts with Item 20 operators, not the franchisor.
- ›Watch for required remodels and equipment refresh cycles buried in Item 6/Item 11.
Industry benchmark ranges for your own budgeting and Item 20 questions — NOT a projection of this franchise's results, and not investment advice. (2026 — general industry benchmarks, refine against real franchisee P&Ls)
Before you commit
5 things to verify
Areas to resolve
- 1Item 19 earnings basis
- 2The fee stack
- 3Disclosures to review
- 4Operational tripwires
- 5Franchisor financial condition
What drove the count
- • Rent is heavy: ~27% of mid-cohort revenue.
- • Royalty runs 7.5% of gross revenue — verify what that leaves at the bottom line.
- • Capital gap of $380,000 is ~2.5x your liquid — meaningful outside financing required.
- • A high-severity operational tripwire is disclosed — see the tripwires section.
- • Franchisor financial distress disclosed (negative net worth) — confirm its ability to support the system against the audited statements.
Computed from disclosed assumptions (DSCR, rent share, payback, cohort survival) — a to-do list to verify before you sign, not a statement of fact about the franchisor.
Financial Condition of the Franchisor
High concernSeveral stress signals show up together here — a net-worth deficit of roughly $2.40M alongside operating losses, thin near-term liquidity, and unit closures. Any one of these alone can be normal for a young brand; appearing together is the pattern that separates real distress from ordinary early-stage losses. Treat this as a franchisor-stability question to resolve — with the specific items below — before you commit.
Weighing against
- ▼negative net worth that is deepening year over year
- ▼operating losses
- ▼more due within a year than current assets to cover it
- ▼heavy dependence on related-party loans to stay funded
In its favor
- ▲the auditor issued a clean (unmodified) opinion and did not raise going-concern doubt
- ▲revenue is growing
Flagged on the FDD's "Special Risks" page and grounded in the Item 21 / Exhibit F audited financials. Figures are extracted; all ratios and grading are computed. Confirm against the source statements and a CPA before relying on them.
Franchisor Leadership
Maya Ellison · Chief Executive Officer
Co-founded the brand in 2016; previously led operations for a 60-unit regional fast-casual chain.
Why it matters: Sets growth strategy and how much weight goes to franchisee support versus new-unit sales.
Daniel Cho · Chief Financial Officer
Joined in 2021 from a private-equity-backed restaurant group, where he ran unit-economics planning.
Why it matters: Owns capital planning and the audited financials you're underwriting here.
Priya Nair · Vice President, Franchise Development
Leads franchise sales and onboarding since 2019; previously a multi-unit franchisee herself.
Why it matters: Your primary contact from awarding through opening — and the person selling you the deal.
System Scale & Turnover (Item 20, p.74)
Total units
58
at year end
Opened (yr)
19
Closed (yr)
3
7.1% of starting units
Changed hands (yr)
2
4.8% of starting units
3 closed and 2 changed hands — 11.9% of the 42 outlets open at the start of the year.
3 closures against 42 outlets open at the start of the year. Item 20 breaks closures out by state and by reason — terminations, non-renewals, reacquisitions, and ceased operations are four different stories, and the table separates them.
42 outlets is this record's reconstruction of the starting count, worked back from the year-end total and the year's openings and closures rather than read from Item 20 Table 1. Every rate below is a share of that starting count, not of today's. Check the reconstruction against Table 1 in your own copy.
Item 20 lists every franchisee who left the system in the last fiscal year, with last known contact information. They are the only people who can tell you why. Call three of them, and three current operators, before you sign.
Who To Call, And What To Ask
Every figure in this report came out of the franchisor's own document. These are the people who can tell you whether it holds up in practice — and the franchisor is required to print their contact information in the FDD you were given.
The system ran 58 outlets at year end. Filter the list to markets like yours, then to the most recent openings — owners two years in remember the ramp; owners ten years in have forgotten it.
Three rungs of the cash ladder in this report run on category benchmarks rather than this brand's figures, because an FDD is not required to disclose what a unit costs to operate. These four answers replace those benchmarks with real numbers from real units.
- 1.What do you actually run for cost of goods, as a percent of sales?
- 2.What do you run for labor, as a percent of sales — and does that include you?
- 3.What is your rent, and what percent of sales does it work out to?
- 4.How many months until the unit covered its own costs, and how much cash did you burn getting there?
- 5.Knowing what you know now, would you buy this one again?
Listed by name, address and phone in the exhibit Item 20 points to (Item 20, p.74).
3 closed and 2 changed owners. Both groups left the system, and both are reachable: the FDD prints last known contact information for franchisees who departed in the most recent fiscal year.
This is the least-made call in franchise diligence and the one that changes minds. Current operators have a working relationship with the franchisor and an asset to resell. People who already left have neither, and they answer differently.
- 1.How did your exit actually happen — did you sell it, hand it back, or were you terminated?
- 2.What did your numbers look like against the Item 19 figures you were shown before you signed?
- 3.What did you find out in year one that you wish you had known on day one?
- 4.Was there anything the franchisor could have done that would have changed the outcome?
- 5.Would you tell someone in my position to do this deal?
Contact details for departed franchisees sit in the exhibit Item 20 points to (Item 20, p.74).
This brand's Item 19 prints its outlets in bands. The highest it discloses — "Top 25% — Average" — works out to $61,500 a month; the lowest — "Bottom 25% — Average" — $26,900. That is a 2.3× spread inside one system, and it is the yardstick for every call you make.
An operator telling you they do fine is not information. An operator telling you a number you can place inside the franchisor's own bands is. Ask the number first, then decide how much weight the rest of the call carries.
- 1.What did this unit do in net sales last year? ($26,900 – $61,500 a month is the band this brand discloses.)
- 2.How many units sit behind the band you were shown, and how many of them beat it?
- 3.What separates the units at the top of this system from the ones at the bottom — site, market, or operator?
- 4.Was your unit's performance what the franchisor projected when you signed?
Item 19 (Item 19, p.71) carries the bands and what each one reported.
The FDD does not say why any individual left, and neither do we — that is question one on the call, not a label anyone can apply from the outside. Nothing on this page is a claim about a specific franchisee's results.
Operational Tripwires
Personal Guarantee high
You and your spouse must personally guarantee all financial obligations under the franchise agreement.
(Item 15, p.59)No Exclusive Territory medium
The franchisor may operate or license other Verde Bowls units near yours, including company-owned locations.
(Item 12, p.51)Approved-Supplier Lock-In medium
Core ingredients and packaging must be purchased from the franchisor or approved suppliers at prices it sets.
(Item 8, p.44)This report is generated from the uploaded document for informational purposes only and is not legal, financial, or investment advice. Figures are extracted by an AI model and may contain errors — verify every number against the source FDD before making any decision.
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Illustrative sample — fictional brand, invented disclosure. Informational only; not legal, financial, or investment advice. On a real FDD, figures are extracted by an AI model and may contain errors; verify against the source document and a qualified advisor before making any decision.