Bottom line
- Total investment $1.3M – $4.1M including a $75K franchise fee, 5.0% ongoing royalty.
- Average unit revenue of $3.6M/year (median $3.4M).
- Rated STRONG with a risk score of 54/100. SBA loan default rate of 0.0% across 5 loans (below the industry average).
- System contracting at -8.2% CAGR over 3 years. Investigate whether closures are franchisor-driven (consolidation) or franchisee-driven (economics).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Hooters unit return on the cash you put in?
Unlevered ROIC · per unit
21%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Hooters units return on equity?
Equity IRR · 5-yr
25.4%
3.10× MOIC
Year-1 DSCR
3.30×
EBITDA ÷ debt service
Equity required
$17.5M
on $32.2M purchase
Total debt
$14.7M
SBA $5.0M + senior + seller note
Overview
About
Franchisees operate casual dining restaurants featuring American wings and seafood cuisine with iconic branded atmosphere. Day-to-day operations include managing full-service dining staff, kitchen operations, inventory control, marketing, and maintaining brand standards across food quality, service, and facility appearance in a declining 297-unit system.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 20 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Hooters presents high risk due to declining unit count, extensive litigation history, undisclosed profitability metrics, and corporate going concern issues that obscure true investment returns.
Score breakdown · what drove the 54 / 100 rating
- 01MINORDeclining unit count (-3.8% YoY) indicates system contraction and market challenges
- 02HIGHMultiple litigation cases involving breach of contract, abandonment, and financial obligation failures suggest operational and legal instability
- 03MINORNo Item 19 (Net Income) disclosure prevents accurate ROI assessment despite $1.26M-$4.1M investment requirement
- 04HIGHGoing Concern status is FALSE, indicating potential financial viability concerns at corporate level
- 05MINORHigh investment range ($1.26M-$4.1M) combined with declining units suggests poor unit economics or market saturation
- 06HIGHLitigation pattern includes franchise failures (unauthorized abandonment) indicating franchisee distress
- 07MED5% royalty on average $3.57M revenue ($178.75K annually) is sustainable only if net margins are healthy—which are undisclosed
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
100 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Hooters · FDD (2023) PDF