# The franchisor behind the estimate

Item 7 is one company's guess at what its restaurants cost. Item 21, in the
same binder, is that company's audited books. Skip the books and you have
taken the guess without looking at who wrote it.

A buildout depends on the franchisor for site approval, a specified kit, an
opening crew, and the training the estimate assumes. Item 21 is where the
document says whether that support has a solvent company behind it. A loss
on the franchisor's statements does not make the construction row wrong, and
a profitable franchisor does not make the high column a bid. Read both.

## What the auditor's report actually says, in three grades

The number matters less than the paragraph, and the paragraph comes in three
forms that get collapsed into each other constantly.

An **unmodified opinion** with nothing added is the ordinary case. It means
the statements present fairly what they claim to present. It says nothing
about whether the business is a good one.

An **unmodified opinion with an emphasis-of-matter paragraph** draws a
reader's attention to a footnote without asserting doubt about anything. The
opinion is still unmodified. This is not a qualification and calling it one
is a false statement about a company's audit.

A report stating **substantial doubt about the ability to continue as a going
concern** is the serious finding, and in a registered filing it normally also
appears as a special risk on the state cover page in the regulator's own
words.

Do not search the PDF for "going concern" and stop. Every audited statement
contains that phrase **twice** — once under management's responsibilities and
once under the auditor's — and both name the company, so both look like
findings. A real finding is its own headed paragraph, before those sections.
Open the report
and look at the headings rather than searching it.

## The brands, on the filings on hand

Most recent fiscal year in the document this index holds for each brand. The
fiscal years are not all the same length or the same twelve months, which is
stated rather than smoothed: The Great Greek closes 30 April and Capriotti's
on a 52/53-week date in late December, so neither lines up against a 31
December franchisor or against the other.

| Brand | Filing read | Latest FY | Net result | Loss years on file | Auditor's report |
| --- | --- | --- | ---: | ---: | --- |
| Dog Haus | 9 April 2024 | 2023 | $2,344,415 | 0 of 3 | unmodified |
| Shah's Halal Food | 11 April 2025 | 2023 | $675,588 | 0 of 3 | unmodified |
| The Halal Guys | 29 April 2024 | 2023 | $517,749 | 0 of 3 | unmodified |
| Crave Hot Dogs and BBQ | 3 April 2024 | 2023 | $502,391 | 0 of 3 | unmodified |
| Atomic Wings | 29 April 2025 | 2024 | $110,756 | 1 of 3 | unmodified |
| 375° Chicken 'n Fries | 30 April 2024 | 2023 | $36,229 | 1 of 2 | unmodified |
| Mad for Chicken | 12 March 2025 | 2024 | $22,817 | 1 of 4 | unmodified |
| Döner Haus | 7 April 2026 | 2025 | ($84,773) | 2 of 2 | unmodified |
| Doner Shack | 29 April 2025 | 2024 | ($90,719) | 1 of 1 | unmodified |
| bluTaco | 24 April 2023 | 2022 | ($311,486) | 3 of 3 | unmodified |
| The Great Greek | 17 August 2023 | 2023, to 30 April | ($891,888) | 3 of 3 | unmodified |
| German Doner Kebab | registered 24 September 2025 | 2024 | ($1,513,634) | 6 of 6 | unmodified, with an emphasis-of-matter paragraph |
| Capriotti's | 21 July 2023 | 2022, to 25 December | ($4,368,938) | 1 of 1 | unmodified |

Two brands in the broader list are absent from that table. Pepper Lunch and
Wienerschnitzel are carried here from a comparative study of published
filings rather than from a document, so there are no statements to read and
their financial condition is simply unknown. That is an absence of evidence
and it is not a clean bill of health.

## Size of loss is not what the auditor reacts to

The most useful pair in the table is at its two ends. Capriotti's lost
$4,368,938 in the year ended 25 December 2022 against an accumulated deficit
of $23,777,352 and total equity of $(2,797,283), and its auditor's report is
unmodified with no additional paragraph.

Atomic Wings' 2024 filing — a different document from the 29 April 2025 one
in the table above — reported a loss from operations of $205,812.35 for 2022,
and its auditor wrote the substantial-doubt paragraph in terms: the
statements were "prepared assuming that the Company will continue as a going
concern", the company "had negative working capital and an accumulated
deficit as of December 31, 2022", and "This condition raises substantial
doubt about its ability to continue as a going concern." The state cover page
carried the matching special risk, saying the franchisor "may not have the
financial resources to provide services or support to you". Total liabilities
exceeded total assets by $33,813.39 at the end of 2022 and $56,846.02 at the
end of 2021.

So a franchisor losing four million dollars presented a cleaner Item 21 than
one losing two hundred thousand. Scale relative to backing is what an auditor
weighs, and only one of those two numbers ever reached a cover page. Read the
paragraph, not the size of the loss.

The Atomic Wings pair also shows that the finding is about a moment. Two
profitable years later — $22,170.92 for 2023 and $110,756 for 2024 — the
substantial-doubt paragraph is gone from the 29 April 2025 filing. What
remains is a softer cover-page item, now headed "Financial Condition" rather
than "Going Concern" and saying the financial condition "calls into question"
the ability to support franchisees, and retained earnings that are still
negative at $(720,005). A going-concern paragraph can be lifted, and the
cover-page risk can outlive it in weaker form.

## A deficit and a loss are different facts

Dog Haus is the most profitable franchisor here in absolute terms and its
statements are titled "Statements of Operations and Members' Deficit". The
Halal Guys was profitable in all three disclosed years while carrying an
accumulated deficit, and that deficit shrank from $(3,693,003) to $(371,445)
as retained profits worked off an older hole. A deficit line describes
accumulated history; a net result describes a year. Neither substitutes for
the other, and a deficit on its own supports no conclusion at all.

Nor is a loss necessarily an operating loss. The Great Greek's three years
underwater are substantially litigation: the consolidated statements show a
loss before other income and expense of $438,589 for the year to April 2023
against lawsuit expenses of $585,739, and $557,461 against lawsuit expenses
of $1,249,528 the year before, on income that nearly trebled over the same
three years to $5,007,609. Item 3 and Item 21 have to be read together or the
cause is invisible.

## The two ends of the histories

German Doner Kebab has the longest loss record on file and the only
emphasis-of-matter paragraph. Six loss-making years out of six with figures
available, totalling roughly $7.47 million, sit against an accumulated
deficit of $7,609,195 at 31 December 2024, and the unaudited interim
statements to 31 July 2025 in the same filing show revenue of $826,507 and
the deficit at $7,923,332. The emphasis paragraph states that the company
"has not yet generated substantial revenue-producing activities", "expects to
continue incurring operating losses until a certain volume of franchise
stores are in operation to cover operating expenses", and that its ability to
meet future obligations "is dependent upon continued working capital advances
from its ownership group". Those advances are disclosed at $3,424,521,
$4,799,661 and $5,936,215 for 2022, 2023 and 2024, with a further $1,521,725
provided after year end and recorded as a related-party payable. FY2018
appears in no filing on hand, so this is six years on file rather than every
year since inception. There is no going-concern qualification and no
financial-condition item on the cover page.

Put that beside the same brand's Item 7, which is $690,500–$1,123,000 per
outlet inside a minimum of five, and the reason this chapter exists is
visible in one sentence: the multi-unit commitment described in [reading a
multi-unit Item 7](/reading-a-multi-unit-item-7/) is years long, and the
counterparty's own statements are in the document.

At the other end are the franchisors with almost no history, which is a
category rather than a criticism. Doner Shack offers one audited year, and
its $90,719 loss belongs to an entity with no US outlets at all, so it is
overhead against an offering that had not yet sold anything; the operating
business is three company-owned restaurants in the United Kingdom held by a
different affiliate whose statements are not in the document. Döner Haus's
first period is a stub from its formation on 26 June 2024. A single-period
statement cannot show a trend in either direction, and the absence of a
downward trend in it is not reassurance about anything. [A first Item
7](/a-first-item-7/) is the companion to that problem on the cost side.

## Döner Haus, on the same terms

This index carries Döner Haus's eighteen Item 7 rows and its 850–1,200
square-foot footprint, and applying a weaker test to it than to anybody else
would make the rest of this chapter worthless.

Its audited statements in the FDD issued 7 April 2026 cover two periods and
both are losses: $38,929 for the period from formation on 26 June 2024 to 31
December 2024, and $84,773 for the year to 31 December 2025, together
$123,702. Members' equity fell from $147,650 to $96,723 over those two
periods. The auditor is Metwally CPA PLLC of Flower Mound, Texas — the same
firm as in the 2024 filing, then at a Bedford, Texas address — and the
opinion is unmodified with no additional paragraph.

Read against the table above, that is a loss in every period on file, which
is also true of Doner Shack, bluTaco, The Great Greek and German Doner Kebab,
and it is the smallest latest-year loss of those five. It is the profile of a
franchisor that has not reached the unit count its overhead assumes, and it
is small enough in absolute terms to be funded from the original contribution
— which is a description of scale, not a prediction. What it is not is a
stronger record than Shah's Halal Food, Dog Haus, The Halal Guys, Crave, 375°
or Mad for Chicken, all of which were profitable in their latest disclosed
year.

## Check the entity, not the brand

Two traps here have nothing to do with the figures.

The audited entity is not always the entity being signed with. Shah's Halal
Food's statements are those of Shah's Halal Food Partners, Inc., a New York
corporation. 375°'s Item 19 income statement belongs to 375 Ventures LLC,
renamed 375 Enterprises LLC between filings, while the audited franchisor is
375 Global Franchise LLC — and the difference is stark, because the outlets
in that representation show net income of $804,218 on sales of $3,782,437
while the franchisor entity roughly broke even at $36,229. Names that differ
by one word are different companies.

And a brand record and a financial record can come from different documents.
Shah's Halal Food is described here from the FDD issued 10 April 2024 while
the financial figures above are read from the 11 April 2025 filing, which is
noted here rather than papered over.

## Reading Item 21

1. Open Item 21 and find the auditor's report. Read its headings in order
   rather than searching the file for a phrase.
2. Classify the opinion as unmodified, unmodified with an emphasis-of-matter
   paragraph, or substantial doubt about going concern. Do not collapse the
   second into the third.
3. Check the state cover page for a financial-condition or going-concern
   special risk, which is the regulator's own summary of the same facts.
4. Record the net result for every fiscal year printed, with the fiscal year
   end, and note which years overlap another filing you hold.
5. Copy the equity or deficit line with its exact caption. Retained earnings,
   a members' deficit and an accumulated deficit are different lines and the
   sign alone does not say which one you have.
6. Confirm the name on the statements is the name on the franchise agreement,
   and look for related-party advances or support from a parent in the notes.

Then go back to Item 7 and read it as what it is: an estimate prepared by
that company, for its own restaurants, on the date printed on the cover. The
[how to read Item 7](/how-to-read-item-7/) sequence starts with the offering
and the date for the same reason this chapter ends with them.

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