Does the Chop5 Salad Kitchen FDD include income statements?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
CHOP5 Franchise LLC ("the Company") was formed on March 22, 2019, (Inception) in the State of Kentucky as a limited liability company. The Company grants franchises to qualified persons for the establishment and operations of a CHOP5 Salad Kitchen restaurant featuring made-to-order salads, salad and grain bowls, soups, and other healthy food options under the CHOP5 name and mark (each a "CHOP5 Salad Kitchen"). All activities are conducted in a designated territory.
Parent and Affiliates
The Company is wholly owned by Chop5 LLC ("Parent") that was organized in the State of Kentucky as a limited liability company on February 18, 2016.
Chop5 Polaris LLC was organized in Ohio as a limited liability company on April 2, 2019. Chop5 Polaris LLC has owned and operated a CHOP5 Salad Kitchen.
CHOP5 IP LLC, was organized in Delaware as a limited liability company on April 10, 2019. CHOP5 IP LLC owns the Proprietary Marks and other intellectual property, which it has licensed to the Company so the Company may sub-license them to the Company's franchisees.
Chop5 Orlando UCF, LLC, was organized in Florida as a limited liability company on September 16, 2019. Chop5 Orlando UCF, LLC opened a Chop5 Salad Kitchen in March 2022.
Chop5 JV Boulder LLC was organized in Colorado as a limited liability company on March 15, 2019. Chop5 JV Boulder LLC opened a Chop5 Salad Kitchen in December 2021. This location closed on February 19, 2023.
A summary of significant accounting policies follows:
Development Stage Operations
The Company's planned franchising activities, as previously described, have not yet commenced. Since its inception the Company has not sold any franchises, has not earned any revenue, and has incurred no expenses. The Company's activities are subject to significant risks and uncertainties, including failing to secure additional capital to fund operations until the Company achieves break-even operational status.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 50)
What This Means (2024 FDD)
According to the 2024 Chop5 Salad Kitchen FDD, the company's planned franchising activities had not yet commenced as of the document's drafting. The company had not sold any franchises, earned any revenue, or incurred any expenses since its inception. This indicates that the FDD does not include traditional income statements reflecting ongoing franchise operations.
Instead, the FDD includes the CHOP5 Franchise LLC notes to financial statements. These notes detail the nature of the business, its formation in Kentucky on March 22, 2019, and its purpose of granting franchises for CHOP5 Salad Kitchen restaurants. The notes also mention the parent company, Chop5 LLC, and affiliated entities like Chop5 Polaris LLC, CHOP5 IP LLC, Chop5 Orlando UCF, LLC, and Chop5 JV Boulder LLC, outlining their respective roles and activities. Chop5 JV Boulder LLC opened a Chop5 Salad Kitchen in December 2021, but this location closed on February 19, 2023.
The absence of traditional income statements in the FDD means that prospective franchisees will need to rely on other sources of information to evaluate the potential profitability of a Chop5 Salad Kitchen franchise. This might include conducting their own market research, speaking with existing franchisees (if any), and carefully reviewing the financial projections provided by the franchisor. It's crucial for potential franchisees to perform thorough due diligence to assess the financial viability of this franchise opportunity, given the limited operating history presented in the FDD.