Reading a multi-unit Item 7

Two filings here put a development-agreement total in Item 7 next to a single-restaurant total, and both invite the same arithmetic. The development figure is larger, it has a number of outlets in its heading, and dividing one by the other looks like the obvious way to find out what a store costs inside a programme. It is not. In both documents the division produces a per-unit figure below the same table’s own single-unit low, which is the signal that the premise was wrong rather than that the franchisor has offered a discount.

What these tables actually price is entry into the agreement plus the first outlet. Everything the agreement obliges a developer to build afterwards is funded when it is built, at whatever it then costs, and no row in Item 7 describes it. That is not a gap in the disclosure. Item 7 is an initial-investment disclosure for the outlet being opened, and the FTC’s Franchise Rule compliance guide frames it that way; a development schedule is a contractual obligation disclosed elsewhere in the document.

Mad for Chicken’s development table

The FDD issued 12 March 2025 contains three Item 7 tables. Two are restaurants: a single Express Model at $243,500–$470,700 on 750–2,000 square feet, and a single Full Restaurant at $321,125–$691,700 on 2,000–4,000. The third is headed Multi-Unit Development Agreement and runs $263,500–$711,700.

Item 7 table, FDD issued 12 March 2025	Range	Low to high
Single Express Model, 750–2,000 sq ft	$243,500–$470,700	1.93
Single Full Restaurant, 2,000–4,000 sq ft	$321,125–$691,700	2.15
Multi-Unit Development Agreement, first outlet	$263,500–$711,700	2.70

The footnote to that third table is the whole of the reading. It states that the developer “will develop the minimum of three (3) Mad for Chicken outlets”, that the $55,000 development fee rises for each additional outlet committed to, and that the low end of the range assumes the first outlet is an Express Model while the high end assumes it is a Full Restaurant.

Read against that footnote, the shape of the range stops being mysterious. It does not sit above the other two tables, it straddles them: the low of $263,500 is $20,000 above the Express Model’s low, and the high of $711,700 is $20,000 above the Full Restaurant’s high. The $20,000 at each end is the difference between the $35,000 initial franchise fee a single-unit buyer pays and the $55,000 development fee, and Item 5 of the same filing credits $10,000 against the initial fee for each outlet developed. The table is the cheaper format at one end, the dearer format at the other, and one fee substitution at both — and that is also why it has the widest band of the three at 2.70 times low to high. The width is not evidence of a riskier build. It is two different restaurants in one row.

Now the error. Divide $263,500–$711,700 by the three-outlet minimum and it gives $87,833–$237,233 an outlet. The top of that is $6,267 below the bottom of the Express Model range in the same document, which is the cheapest restaurant the franchisor offers. No reading of the filing supports a per-outlet cost that another table in the same Item 7 contradicts.

Doner Shack’s is the matched pair

The FDD issued 29 April 2025, seven weeks after Mad for Chicken’s, does the same thing with different numbers. Item 7 gives $498,000–$1,007,000 for a single restaurant on premises of 1,200 to 1,800 square feet, and $578,000–$1,087,000 for a three-restaurant development agreement — exactly $80,000 more at both ends of the range.

Divided by three, $578,000–$1,087,000 is $192,667–$362,333 an outlet, and $362,333 is $135,667 below the single-restaurant low of $498,000. Same shape of mistake, same direction, same magnitude of wrongness.

The $80,000 increment is the giveaway, and it is worth stating why rather than guessing what it consists of. Two additional restaurants cannot cost $80,000 between them when the filing’s own estimate for one is at least $498,000. A development range that exceeds the single-unit range by a fixed amount at both ends is describing one restaurant and a fee, not three restaurants. What the $80,000 is composed of is not established by the difference and should not be reverse-engineered from it.

Filing	Single restaurant	Development agreement	Increment	Development ÷ outlet minimum
Mad for Chicken, 12 March 2025	$243,500–$470,700 Express; $321,125–$691,700 Full	$263,500–$711,700, three-outlet minimum	$20,000 at each end	$87,833–$237,233
Doner Shack, 29 April 2025	$498,000–$1,007,000	$578,000–$1,087,000, three restaurants	$80,000 at each end	$192,667–$362,333

Both quotients are below their own filing’s cheapest single-restaurant low. That is the test, and it takes one subtraction: if the development range divided by the outlet count comes out beneath the single-unit range in the same document, the development range is not a per-unit figure.

The same mistake upside down

German Doner Kebab’s filing of 3 September 2024 shows the mirror image, and it is the more expensive error of the two because it runs the other way. Its Item 7 range of $690,500–$1,123,000 is stated per outlet on 1,200–1,400 square feet, and the document defines who is buying: “‘You’ means a person who buys the right to operate 5 or more GDK Outlets from us.”

So the printed range is one restaurant inside a commitment of at least five, and the adjustment for the commitment runs upward from it rather than downward. Five times the printed range is $3,452,500–$5,615,000. That multiplication is an illustration of scale and not a schedule: the filing does not say the five open together, the later ones will be built at their own future costs rather than at 2024’s, and the disclosed single-outlet Item 19 revenue in that document describes one unit of such a commitment rather than the commitment. A reader who takes $690,500 as the price of entering the GDK system has understated it by a factor near five; a reader who takes $578,000 as the price of three Doner Shack restaurants has understated that by a factor near three. Neither is an arithmetic slip. Both come from reading the total without the sentence above it.

Building a programme figure honestly

A development commitment can be costed, but only as a floor with the missing pieces named. Take each filing’s own single-unit estimate for the outlets after the first, add it to the disclosed development range, and label the result as what it is.

For Doner Shack, $578,000 for the agreement and the first restaurant plus two more at the single-restaurant estimate is $1,574,000 at the low end and $3,101,000 at the high, against a printed development range of $578,000–$1,087,000. For Mad for Chicken, three Express Models comes to $750,500 and three Full Restaurants to $2,095,100, using $263,500 or $711,700 for the first and the single-format table for the second and third.

Four things are missing from every one of those figures, and a budget that does not carry them is not conservative:

1. Cost movement over the schedule. Outlets two and three are built in later years, and the what changes between two filings chapter is about how little a franchisor’s estimate typically moves — which is a statement about the estimate, not about construction pricing.
2. The fee treatment of the later outlets. Mad for Chicken’s footnote says the development fee rises for each additional outlet committed to and Item 5 credits $10,000 an outlet against the initial fee, and neither the escalation nor the arithmetic of applying the credits to outlets two and three is quantified in the document. The floors above use the single-unit tables, which include a $35,000 initial fee, and that is a substitution rather than a disclosure.
3. Concurrency. Two buildouts in the same quarter need two sets of working capital at once, and the additional-funds row in each table is sized for one restaurant. The additional funds line is why that row will not stretch.
4. The schedule itself. A development agreement carries opening deadlines, and a deadline is a cost when it forces a site, a contractor or a lease that would otherwise have been refused. Change orders and overruns is the row-level version of that pressure.

Whose estimate it is, over how long

A single-unit buyer is relying on the franchisor through one buildout. A developer with a three- or five-outlet obligation is relying on it through several, over years, for site approval, design, the specified vendors and the opening crews. That makes the franchisor’s own Item 21 a live question for a multi-unit reader in a way it is not for someone opening one store and reading one table.

The figures belong in one place rather than scattered through the cost chapters, and they are in the franchisor behind the estimate, which covers every brand here on the same terms — including Döner Haus, whose two audited periods are both losses and whose members’ equity fell over them, and which is not the strongest record on that page. The point of putting them together is that a commitment is a bet on the counterparty’s continuity, and Item 7 is silent about the counterparty.

The checks, in order

1. Read the heading of every Item 7 table in the document before reading any number. Count how many are single outlets and how many are development or minimum-commitment totals.
2. Find the outlet minimum, in the table’s footnote or in Item 5, and find the development fee separately from the initial franchise fee.
3. Read the footnote for what the low and high columns assume. A range whose two ends assume two different store formats is not a range for one project.
4. Divide the development total by the outlet count once, as a test and not as a result. If the quotient falls below the single-unit low in the same document, stop treating it as per-unit.
5. Build the programme floor from the single-unit tables, and write the four missing pieces above underneath it.
6. Check which direction the commitment runs. A per-outlet range inside a five-outlet minimum is multiplied, not divided.
7. Take the whole thing to from Item 7 to a site budget one restaurant at a time. The first store is the only one any of these tables costs.

A development-agreement Item 7 is a well-formed disclosure that answers a narrower question than its heading suggests. It says what it costs to sign and open once. The obligation it attaches to is disclosed elsewhere in the document, and the money for it is not in the table at all.

One thing the league table at the end of this chapter demonstrates by omission. It collects the franchise-fee row from every filing this index has itemised, and every one of those rows is a single-unit initial fee. Mad for Chicken’s $55,000 development fee is not there, because the line-item worksheet here is its Full Restaurant table; Doner Shack is not there at all, because no line-item schedule for it is on these pages. A development fee is an Item 5 and Item 7 figure that a single-unit worksheet will never show you, which is reason enough to read the headings before the rows.