A first Item 7

A first Item 7 has no predecessor. Nothing in it has been revised. Nothing can be checked against last year. The estimate stands on whatever the franchisor knew when it wrote the table. Every system that now has four filings started here.

An estimate with no openings behind it

Doner Shack’s disclosure document was issued on 29 April 2025 by Doner Shack Franchising, LLC, a Delaware limited liability company organised on 24 November 2020. Item 7 gives $498,000–$1,007,000 for a single restaurant, assuming premises of 1,200 to 1,800 square feet. The filing states that “we began offering franchises as of September 5, 2024”.

Item 20 of the same document reports zero franchised outlets and zero company-owned outlets at both the start and the end of each of 2022, 2023 and 2024, with zero transfers, terminations, non-renewals and closures in all three years — because there were no outlets to transfer, terminate or close. A footnote adds that the franchisor has no US operations, and that affiliates operate three restaurants in the United Kingdom with four more UK franchises in active development. There is no Item 19.

So the range is an estimate with no US restaurant behind it. A $498,000 low and a $1,007,000 high were prepared before a single US buildout under this offering had been costed against an invoice. The band is 2.02 times wide low to high, which is unremarkable next to the itemised filings here. The width is not the point. The point is what you can and cannot do with it.

You can treat it as a hypothesis and price it. A contractor’s scope for a 1,200-to-1,800-square-foot space, an equipment quote against the system’s specification, a lease with the landlord’s delivered condition written into it, and a monthly cash model for the stated initial period will produce a number you can put next to the disclosure. That is the same work from Item 7 to a site budget asks for on any filing. Here there is just no second source of evidence inside the document itself.

You cannot check it against the system’s own openings, because the FTC’s usual advice — ask recent franchisees what they actually paid and how long it took — has no one to ask in the United States. Comparing this year’s table with last year’s also has nothing to work with. Both of those become available later: the second filing is the first chance to see whether the estimate held, which is what what changes between two filings is for.

Three restaurants do not cost $1,087,000

The same Item 7 discloses a three-restaurant development agreement at $578,000–$1,087,000, against $498,000–$1,007,000 for a single restaurant. The development figure is exactly $80,000 above the single-restaurant figure at both ends of the range.

Read as the cost of three restaurants, that range is a bargain that does not exist. Divide it by three and it gives $192,667–$362,333 a restaurant, which is below the low end of the same table’s single-restaurant estimate — the filing would be contradicting itself on the same page. It is not. The disclosed range covers entering the development agreement and opening the first restaurant. The second and third restaurants are funded when they are built, at whatever they then cost.

Getting that wrong is a factor-of-three error in the direction of optimism, and it is an easy one to make, because the row sits directly beneath the single-unit column under a heading that contains the number three. A funding request built from the development column would arrive at a lender with roughly a third of the capital the buildout schedule needs. What the $80,000 increment consists of is not something this page can establish from the difference, and it should not be reverse-engineered. Plan one restaurant at a time.

Mad for Chicken’s filing of 12 March 2025 offers the same trap in a different brand’s document. Its Multi-Unit Development Agreement table is $263,500–$711,700, with a $55,000 development fee and a stated minimum of three outlets, and its footnote says the low end assumes the first outlet is an Express Model while the high end assumes it is a Full Restaurant. Divided by three that is $87,833–$237,233 an outlet, below the low end of the Express Model in the same document. The two brands are a matched pair, and reading a multi-unit Item 7 walks both of them through.

The same mistake, the other way up

German Doner Kebab’s 3 September 2024 filing shows the mirror image. Its Item 7 range of $690,500–$1,123,000 is stated per outlet, and the document defines its reader accordingly: “‘You’ means a person who buys the right to operate 5 or more GDK Outlets from us.” The range describes one restaurant inside a commitment of at least five, so the multi-unit adjustment runs upward from the printed figure rather than downward.

Two multi-unit disclosures, one to be multiplied and one not to be divided, and in both cases the mistake is made by reading the total without the sentence above it. A development total is not a per-unit total. A per-unit total is not a programme total. The only thing that establishes which is which is the format statement — which is also the first step in diffing the same offering and in how to read Item 7.

What sits outside a first table

A first Item 7 tends to be read alone, and it is the disclosure with the least context around it, so the rest of the document does more work than usual.

Doner Shack’s filing discloses a $40,000 initial franchise fee with a 20 percent discount for an honorably discharged veteran on a first franchise, a royalty of 6 percent of gross sales payable weekly, a brand fund of up to 2 percent, a local advertising requirement of 2 percent, $10,000 of grand opening advertising, and a $10,000 transfer fee. The term is ten years with two successive five-year renewal terms. The territory is protected but expressly not exclusive, with no minimum geographic size, sized case by case. Item 11 gives training as 39 to 52 classroom hours and 120 to 160 hours on the job.

The brand fund being capped rather than fixed is the kind of detail that only matters after opening, and it is exactly what what Item 7 excludes collects: a range that stops at the end of the initial period says nothing about the fee stack that runs for ten years. The grand-opening figure is a fixed obligation rather than a discretionary budget, which is the distinction the grand opening chapter draws.

Two facts in the document bear on cost without appearing in Item 7. Item 13 states that “Currently, we do not have a federal registration for our principal trademark”, that the application for DONER SHACK is pending with a filing date of 3 May 2024 under serial number 79/411,340, and that if the right to use the trademark is challenged, “you may have to change to an alternative trademark, which may increase your expenses”. The same Item states that no litigation over the marks is pending, that the franchisor is “not aware of any superior rights in, or infringing uses of” them, that there are “not any effective material determinations” of the USPTO, the Trademark Trial and Appeal Board, a state trademark administrator or any court adverse to its rights, and that there is no pending opposition or cancellation proceeding. Those are the document’s own words in both directions, and the cost consequence they name — signage, print, packaging and digital assets under a different name — is not a row in any Item 7.

That was the position on 29 April 2025 and it is not the position now. The public USPTO status record for serial 79/411,340, retrieved on 16 August 2026, shows registration 8,290,085 on the Principal Register, issued 9 June 2026, live and active in all five classes the mark was filed in — 021, 035, 039, 043 and 045. Getting there was not smooth. A non-final action was mailed on 20 December 2024 as a refusal sent to the International Bureau, a response was received on 5 March 2025, and a letter of suspension issued on 19 March 2025; the application sat suspended through two status checks, was approved for publication on 25 March 2026, was published for opposition on 21 April 2026 with no opposition filed, and registered on 9 June 2026. The office action itself is not in hand, so nothing is said here about why the refusal issued or what was cited against it.

The filing was issued on 29 April 2025, which is four months after that non-final action and six weeks after the suspension letter. Whether a non-final action is an “effective material determination” within the meaning of Item 13 is a question about the disclosure rule’s language, and a handbook about buildout cost is not the place it gets answered. The dates are here because anyone holding both documents will find them and should not have to guess the order they happened in.

The part of the register that bears on cost is the disclaimer. The words “DONER SHACK” are disclaimed in registration 8,290,085, which means the registrant claims no exclusive right in those words apart from the mark as shown: what is registered is the composite logo, not the name. A separate standard-character application for the words alone, serial 99/401,785, was filed on 19 September 2025 and suspended by a letter issued on 7 April 2026, where it remains under examination with no registration. So the expense Item 13 warned about is narrower than it was when a prospect was reading that sentence, and it has not disappeared. Both statements belong on the page with their dates attached: the franchisor’s, true when the document was delivered, and the register’s, true now.

The second is an identification question of the kind diffing the same offering exists for. Item 1 says an affiliate, Haus Hospitality Ltd., owns the trademarks described in Item 13 and licenses them to the franchisor; Item 13 says a different affiliate, Franchise Brands International Inc., is in the process of applying for registration of the primary word and design marks. A first filing has no earlier document to check that against.

Reading a range with no history

1. Establish whether the offering has ever operated in the United States, from Item 20 rather than from the brand’s own materials, and note the years covered.
2. Find whether any Item 19 exists. Where there is none, the Item 7 range is the only quantified figure in the document about the business.
3. Confirm which of the Item 7 tables is a single unit and which is a development or minimum-commitment total, and never divide the second by the number of units.
4. Take the format statement’s footprint as the specification a contractor prices against, not as a description of an existing restaurant.
5. Price the build independently. On a first filing the site budget is not a check on the estimate; it is the better of the two numbers.
6. Read Items 5, 6, 8, 11 and 13 for obligations and contingencies the table does not carry, and check Item 13’s trademark statements against the public register rather than treating them as current. They were accurate on the issuance date, which on an older document is the only thing they were.
7. Watch for the next filing. A first Item 7 becomes checkable exactly once, when the second one is issued.
8. Ask which states the offering is registered in before working the brand at all. A current document and active recruitment are not the same thing — Doner Shack’s own franchise site listed US enquiries as on hold when it was last checked.

Doner Shack appears here as an issued total with no line-item worksheet: a range, a footprint, a date, and no composition to interrogate. That is a fair description of the evidence rather than a comment on the brand, and the remedy is the same one the worksheet is built for — put the filing’s figure in one column, the site’s own quotes in the next, and the reason for the difference in the third. On a first filing, the second column is doing almost all of the work.