Freshii Franchise Cost: Its FDD Carries a Risk Statement

Most of what a prospective franchisee needs to know about Freshii is written by Freshii, in its own disclosure document, in language it was required to include. It is not on any marketing page, and almost nobody reads it.

The two risk statements

The disclosure document we read, issued May 19, 2023, contains this in the franchisor’s own words:

“Financial Condition. The franchisor’s financial condition, as reflected in its financial statements (see Item 21), calls into question the franchisor’s financial ability to provide services and support to you.”

And separately:

“Turnover Rate. During the last 3 years, a large number of franchised outlets (76) were terminated or ceased operations for other reasons. This franchise could be a higher risk investment than a franchise in a system with a lower turnover rate.”

We are quoting rather than characterising, because the language is the franchisor’s own and it is more direct than anything we would write.

The date matters as much as the content. That FDD is from May 2023, issued after Foodtastic completed its acquisition in February 2023. Three years have passed. A current disclosure document may say something materially different, and establishing what it says is the first question to ask, not the last. We could not locate a 2024 or 2025 version.

What Item 20 shows

The unit tables are the other half of the picture, and they are the franchisor’s own audited disclosure:

Fiscal year	US franchised outlets	US company-owned
Start of 2020	121	0
End of 2020	87	0
End of 2021	63	0
End of 2022	52	0

That is a decline of roughly 57 percent over three fiscal years, with no company-owned locations at any point. Our Item 20 guide covers why these tables are the most informative pages in the document: openings are marketing, but closures, terminations and transfers are disclosed under a legal standard.

We could not verify any US count more recent than that table from a source we would cite. Trade press documented the pre-acquisition trend separately, reporting North American units falling from 343 to 332 between September 2021 and September 2022 alongside a 39.5 percent decline in cash on hand.

The costs, and a definition other brands should copy

Fee $30,000. Single restaurant $172,500 to $641,000. Five-restaurant area development agreement $244,500 to $700,500.

Royalty 6 percent of Gross Sales. Here Freshii does something this site has been asking for repeatedly: its FDD defines the term.

“‘Gross Sales’ means all revenue from sales conducted upon or from the Restaurant… including all sales placed through online, mobile application and remote ordering platforms.”

That definition is the thing missing from Robeks and Jamba, which charge on net sales without saying what net excludes, and from Nothing Bundt Cakes, which states no basis at all. Naming delivery and app orders explicitly matters more each year, because a percentage that quietly excludes or includes third-party delivery is a materially different price.

Marketing totals 3 percent, split in the US as up to 3 percent to the fund, currently charged at 1.5 percent, plus a mandatory 1.5 percent spent with local vendors. Canada splits the same 3 percent differently, as 2 percent national and 1 percent local.

Term 10 years, with a 10-year successor term available on conditions including remodel or relocation. One clause worth noting: on renewal you may be asked to sign an agreement with materially different terms than your original, though your territory boundaries stay the same. The area development agreement itself carries no renewal right at all.

Single units are rare by the franchisor’s own account

“We expect to sign Franchise Agreements that are not covered by an Area Development Agreement only in rare situations.”

And an area development agreement “typically” requires committing to a minimum of five restaurants.

So a single-unit agreement is structurally possible and, on the franchisor’s own statement, unusual. That is a clearer answer than most brands give, and it is a different thing from IHOP’s flat international prohibition or Tropical Smoothie’s three-cafe minimum.

Ownership, and where the offer currently points

Freshii has been owned by Foodtastic Inc., a Montreal-based restaurant group, since February 2023, which the FDD confirms in Item 1.

There is a live dispute at the ownership level, and we are stating it with its status. The Globe and Mail reported that Freshii founder Matthew Corrin sued Foodtastic in the Ontario Superior Court of Justice in January 2024, seeking at least CA$2.5 million and alleging his post-acquisition role was diminished. Foodtastic has filed a defence denying wrongdoing. The matter was pending at the time of our research and we found no resolution. An allegation is not a finding, and this is a dispute between a founder and an acquirer rather than anything about the franchise offering itself.

The FDD also discloses two earlier matters, both resolved: an arbitration with an Ontario company settled in February 2022, and a claim by a former development agent resolved in February 2023. Both concluded with mutual releases and no admission of wrongdoing.

On availability, we could not reach a conclusion. Freshii.com’s own “Become a Franchisee” link routes to a Foodtastic page describing locations across Canada, with no mention of the United States anywhere on it. A third-party directory shows it as not accepting applicants, which is evidence about the directory rather than the franchisor. Against that, the 2023 US FDD lists agents for service of process in fifteen states, which franchisors generally maintain while still offering in those states. Ask directly.

How it compares in its category

Set against the other salad and bowl brands, Freshii publishes the lowest single-unit floor at $172,500, and its US availability is the least clear. It is also the only one of the five whose disclosure document we could obtain and read. That document defines its royalty basis and carries two risk statements; the others do not host an FDD publicly, so we could not check theirs either way. Our side-by-side of the salad and bowl brands leads on availability rather than cost, for that reason. Pokeworks is the closest comparison on investment.

Another brand with the same risk statement

Freshii is not alone. Sobol’s disclosure document carries four Special Risks, including the same financial-condition wording, alongside spousal liability and mandatory minimum payments. Two brands in one category is a reason to read the front of every disclosure document you are handed, not just this one.

Questions to ask before you rely on any figure

• Which FDD is currently in force, and does it still carry the Financial Condition and Turnover Rate risk statements?
• What do the Item 21 audited financials show now, under Foodtastic ownership?
• What is the current US unit count, and what does Item 20 show for the last three years?
• Are US franchises currently being offered at all, or is the offer Canada-only right now?
• Is a single-restaurant agreement available, given that the FDD calls them rare?
• What “materially different terms” could apply on renewal, and what has changed for renewing franchisees recently?
• May I speak with current and former franchisees, including some who closed?
• Will a franchise attorney and an accountant review the full FDD with me before I commit?