38
The franchisor behind the estimate
Item 7 is one company's guess. Item 21 is the audited statements sitting in the same binder. Read who made 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 still 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. A profitable year does not make the high column a bid. Both pages belong in the same reading.
What the auditor’s report actually says
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. The statements present fairly what they claim to present. That says nothing about whether the business is a good one.
An unmodified opinion with an emphasis-of-matter paragraph points the reader at a footnote without asserting doubt about anything. The opinion is still unmodified. Calling that paragraph a qualification 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.
The brands, on the filings on hand
Most recent fiscal year in the document held here for each brand. The fiscal years are not all the same length or the same twelve months: 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. Their financial condition is unknown.
The size of the loss is not what the auditor reacts to
Capriotti’s and Atomic Wings sit at opposite ends of the table and show why the paragraph matters more than the dollar figure. 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). 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.
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. The cover-page risk can outlive it in weaker form.
A deficit and a loss are different facts
Dog Haus reported $2,344,415 of net income in FY2023, the largest profit in the table, 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.
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.
Shah’s Halal Food Partners is profitable in the three years on file. Item 3 still has to be read. On 31 October 2024 Maryland found that license agreements the company had sold — mark, recipes, suppliers, signage, required fees — were franchises under Maryland law, unregistered, without an FDD. The consent order is public. A profitable Item 21 does not make those licenses a franchise track record, and the 2024 Item 7 on this site is still a table with no operating franchisees behind it.
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. 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. The US company has never covered its own costs. The owners are keeping it alive. If the advances stop, the franchisee has no claim on them.
Put that beside the same brand’s Item 7, which is $690,500–$1,123,000 per outlet inside a minimum of five. The multi-unit commitment described in reading a multi-unit Item 7 is years long, and the counterparty’s own statements are in the document. The shops that filing named as 2024 openings in Bay Ridge and Brighton Beach are now marked permanently closed. Sugar Land and Westfield are too. Columbus Park is in the subsequent-events note. The company writing the estimate has not kept the shops it counted.
At the other end are the youngest franchisors. Doner Shack offers one audited year; the operating business is three company-owned restaurants in the United Kingdom held by a different affiliate whose statements are not in the document. As of 2026 it is not selling US franchises. A signed Prosper, Texas storefront is unpublished as open. Döner Haus’s first period is a stub from its formation on 26 June 2024, which is what a new franchisor entity produces. A first Item 7 is the companion on the cost side.
Döner Haus
Döner Haus’s Item 7 here is eighteen rows for an 850–1,200 square-foot standing-service imbiss. The FDD issued 7 April 2026 covers a stub year from formation on 26 June 2024 plus FY2025. The auditor is Metwally CPA PLLC of Flower Mound, Texas, the same firm as the 2024 filing, and the opinion is unmodified. A young franchisor’s statements cover the years the company has existed. Set beside GDK’s six loss years, owner advances and emphasis-of-matter paragraph, that is a different Item 21: a new entity with an unmodified opinion, not a US company that has never covered its own costs.
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. The difference is stark: 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.
Reading Item 21
Open Item 21 and find the auditor’s report. Read its headings in order rather than searching the file for a phrase. Classify the opinion as unmodified, unmodified with an emphasis-of-matter paragraph, or substantial doubt about going concern, and do not collapse the second into the third. 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. Record the net result for every fiscal year printed, with the fiscal year end, and note which years overlap another filing you hold. 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. 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 an estimate prepared by that company, for its own restaurants, on the date printed on the cover. The how to read Item 7 sequence starts with the offering and the date for the same reason.