Bottom line
- Total investment $2.1M – $3.8M including a $50K franchise fee, 5.0% ongoing royalty.
- Average unit revenue of $2.6M/year (median $2.6M).
- Rated STRONG with a risk score of 44/100. SBA loan default rate of 0.0% across 24 loans (below the industry average).
- System growing at 29.9% CAGR over 3 years with 89 total units — strong expansion trajectory.
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 Mr. Gatti’s FEC unit return on the cash you put in?
Unlevered ROIC · per unit
9%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Mr. Gatti’s FEC units return on equity?
Equity IRR · 5-yr
48.1%
7.13× MOIC
Year-1 DSCR
1.91×
EBITDA ÷ debt service
Equity required
$2.2M
on $10.3M purchase
Total debt
$8.1M
SBA $5.0M + senior + seller note
Overview
About
Mr. Gatti's FEC (Family Entertainment Center) franchisees operate pizza restaurants combined with arcade games, redemption games, and entertainment activities. Day-to-day operations include food preparation and service, customer management across dining and gaming areas, maintenance of entertainment equipment, and supervision of staff across both revenue streams.
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 · 8 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
Moderate-to-caution risk: substantial capital requirement and litigation history offset by reasonable growth and protected territory, but lack of profitability disclosure and settlement context warrant deep due diligence.
Score breakdown · what drove the 44 / 100 rating
- 01MEDNet income not disclosed in Item 19 — unable to verify profitability claims against $2.57M average revenue
- 02HIGH2019 litigation with $200k settlement suggests contract/operational disputes; lack of admission complicates future risk assessment
- 03MEDHigh initial investment ($2.14M–$3.84M) combined with undisclosed net income creates difficulty calculating ROI and payback period
- 04HIGHGoing Concern status = False is ambiguous; clarify whether this applies to franchisor or means non-disclosure of going concern issues
- 05MEDModest growth rate of 14.5% YoY with only 89 units suggests limited system maturation and economies of scale
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
84 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Mr. Gatti’s FEC · FDD (2025) PDF