The Hot SpotFranchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
FranchiseVerdict summary · 2026
A The Hot Spot franchise requires a total initial investment of $80K – $155K, including a $40K franchise fee and an ongoing 5.0% royalty[2]. Per the 2025 FDD, average unit revenue was $551K[2]. Verdict grade: A. Run a live ROI scan →
Data last verified June 18, 2026 · figures per the 2025 FDD issuance
Overview
- Investment
- $80K – $155K
- 6th pct Recreation & …
- Avg gross sales
- $551K
- 10th pct Recreation & …
- Royalty
- 5.0%
- 1st pct Recreation & …
- Units
- 9
- 21st pct Recreation & …
- SBA default
- N/A
Quick verdict · Recreation & Entertainment · color = vs category peers
Green = >15% above Recreation & Entertainment avg · No shading = within ±15% · Red = >15% below avg · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Each dollar invested generates 4.7x in gross revenue, well above the typical 1.5-2.5x range.
Started franchising in 2023. Newer systems carry more uncertainty but may offer better territories.
The franchisor's auditor raised doubt about continued operations. This is a serious risk signal.
137% cash-on-cash return. Above the 20% threshold most investors target.
Bottom line
- Total investment $80K – $155K including a $40K franchise fee, 5.0% ongoing royalty.
- Average unit revenue of $551K/year (median $468K), with an estimated 137% cash-on-cash return.
- Verdict A (Top Quintile) with a risk score of 21/100.
- Auditor disclosed a going-concern note, which flagged doubt about the franchisor's ability to continue operations. Verify against the latest FDD.
Item 1 · who you're contracting with
The Franchisor
- Legal entity
- The Hot Spot Studios LLC
- Incorporated in
- NV
- HQ
- 1180 Scheels Drive, # 107, Sparks, Nevada 89434
- Auditor
- Kezos & Dunlavy
- Audited financials
- Franchisor revenue
- $35K
- vs $196K prior year
- ⚠ Going-concern note
- Disclosed in FDD 2025
- Auditor flagged doubt about continued operations. Verify against the latest FDD before deciding.
Overview
About
The Hot Spot franchisees operate quick-service restaurant or beverage-focused retail locations. Day-to-day operations likely involve inventory management, food/beverage preparation, staffing, customer service, marketing within protected territories, and biweekly royalty reporting to corporate.
- CEO
- Olivia Parsons Franks
- Headquarters
- NV
- Founded
- 2023
- FDD year
- 2025
- States available
- 3
FDD Item 7 · 2025 filing · 17 line items
Initial investment breakdown
| Line item | Low | High | |
|---|---|---|---|
| Initial Franchise Fee | $40K | $40K | |
| Training Expenses | $2K | $4K | |
| Website Development | $1K | $1K | |
| Premises deposit | $2K | $9K | |
| Utilities deposits | $200 | $500 | |
| Rent - three months | $6K | $24K | |
| Design and Architect Fees | $0 | $3K | |
| Leasehold Improvements, Construction and/or Remodeling | $0 | $15K | |
| Furniture, Fixtures, & Equipment | $8K | $18K | |
| Exterior Signage | $2K | $6K | |
| Business Licenses and Permits | $100 | $500 | |
| Computer Systems | $1K | $2K | |
| Initial Inventory to Begin Operating | $6K | $12K | |
| Professional Fees | $2K | $4K | |
| Initial Launch Marketing & Grand Opening Advertising | $2K | $3K | |
| Insurance | $600 | $2K | |
| Operating Expenses / Additional Funds - three months | $8K | $12K | |
| Total initial investment | $80K | $155K |
Line items extracted from FDD Item 7. Ranges reflect the franchisor's stated low and high per line. Total is the sum of line-item lows / highs — actual costs may fall outside this range depending on market and build-out scope.
Single-unit · estimated
Returns at a glance
Indicative numbers using FDD Item 7 / Item 19 inputs and category-benchmarked cost ratios. Full single-unit, 25-unit portfolio, and LBO models (with every input editable to stress-test your own scenario) live on the financials page.
Store EBITDA · annual
$94K
17.0% margin
Unlevered ROIC
74%
EBITDA / total invested capital
Payback
16 mo
cash-on-cash, unlevered
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $80K – $155K
- Better than avg vs category
- Liquid capital req'd
- $8K – $12K
- Better than avg vs category
- Franchise fee
- $40K – $40K
- Better than avg vs category
- Royalty
- 5.0%
- Gross Revenue · typical 6–8%
- Ad fund
- 1.0%
- typical 3–5%
- Total fee load
- 6.0%
- vs 9–13% typical
- Payback period
- 0.7 yrs
- From FDD / Item 19
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 5.0% of gross sales |
| Marketing / ad fund | 1.0% of gross sales |
| Technology fee | $150 |
| Transfer fee | $13K |
| Renewal fee | $4K |
| Inventory (initial) | $6K – $12K |
| Total fee load | 6.0% of rev |
A 6.0% total fee load is unusually lean. More of each revenue dollar stays with the franchisee.
Financial Performance
- Avg gross sales
- $551K
- Per unit, per year
- Median gross sales
- $468K
- Avg net income
- $161K
- Cash-on-cash
- 136.8%
- Based on Net Income / investment midpoint
- Item 19 type
- historical
- Sample size
- 3 units
- vs category median 5
- Range (low → high)
- $76K→$1.1M
- Cohort dispersion (min → max)
- Transparency tier
- full
- Categorical assessment of disclosure depth
- Transparency
- 10 / 5
- vs category median 4 / 5 · above
Compared against 176 Recreation & Entertainment brands
Revenue is 4.7x the investment midpoint. At typical franchise margins, this suggests a payback under 3 years.
vs Recreation & Entertainment averages
How The Hot Spot Compares
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 9
- Opened
- 6
- Last reporting year
- Closed
- 0
- Turnover rate
- 0.0%
- Company-owned
- 3
- Corporate units in the system
- % franchised
- 67%
- vs corporate-owned
3-year detail · Item 20
- Transfers (3yr)
- 0
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 16 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 contact records (FDD Item 20). Shows states with at least one current operator on file. Full state registration data (Item 12) will appear on a future FDD refresh.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA loan disclosures. This brand has only 2 7(a) loans on file; statistical reliability is limited below 10 loans.
- Total loans
- 2
- Loan volume
- N/A
- Amount data pending
- Median loan
- N/A
- Charge-off rate
- N/A
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- N/A
- 5-yr charge-off
- N/A
- Loans approved 2021+
- Active lenders
- 0
- Defaults
- 0
Explore lender portfolios on Bank Reports or regional data on State Reports.
Risk analysis
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
A micro-franchise system with unverified growth, unclear unit economics variance, and limited operational proof points that requires intensive validation of franchisee profitability claims.
Litigation (Item 3)
0 case reference(s): 0 pending, 0 settled.
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Kezos & Dunlavy⚠ Going-concern note flagged
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Supplier relationship · Items 8 & 16
- Franchisor sells you products: No
- Must buy proprietary products: No
- Restricted to system-approved products: Yes
Score breakdown · what drove the 21 / 100 rating
- 01MEDOnly 9 units systemwide indicates extremely small, unproven franchise system with limited scale and operational support infrastructure
- 02MEDNo disclosed unit growth trajectory despite 5-year track record raises questions about expansion viability and franchisee satisfaction
- 03MINORHigh royalty burden (5% biweekly) combined with $39,500 franchise fee structure may compress margins for lower-performing locations
- 04MINORSignificant variance between average revenue ($551k) and average net income ($124.9k) suggests 22.7% net margin may not be achievable across all unit types or locations
- 05MINORHigh initial investment range ($80.1k-$154.7k) relative to unit count suggests uneven performance or territory-dependent profitability concerns
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 5 years |
|---|---|
| Renewal term | 5 years |
| Allowed renewalsℹ | 5 |
| Territory type | contiguous zip codes |
| Protected territory | Yes |
| Online sales rights | Restricted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Required |
| Non-compete (years)ℹ | 2 years |
| Right of first refusalℹ | Yes |
| Termination notice | 5 days |
| Mandatory arbitration | Yes |
| Jury trial waiver | Yes |
| Governing law | Nevada |
| Litigation count | 0 |
View Item 3 litigation summary
0 case reference(s): 0 pending, 0 settled.
Items 10, 11
Training & Operations
- Classroom training
- 24 hrs
- On-the-job training
- 28 hrs
- Training location
- On-site and corporate
- Site selection
- franchisor
- POS system
- Square
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: Square
Item 20 · call current owners
Franchisee Contacts
18 owners to call
Name · phone · city · state. Extracted from FDD Item 20
FDD download
The Hot Spot · FDD (2025) PDF
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a The Hot Spot franchise?
The total investment to open a The Hot Spot franchise ranges from $80K – $155K, with an initial franchise fee of $40K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do The Hot Spot franchise owners earn?
According to Item 19 of the The Hot Spot FDD, the average gross sales per unit is $551K. The median is $468K. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
What is The Hot Spot's franchise failure rate?
SBA 7(a) loan charge-off data is not available for The Hot Spot (fewer than 10 loans on file). Charge-off rates are one way to gauge franchise risk, but not all franchise loans go through the SBA program. We recommend reviewing turnover and closure data in the FDD and speaking with current franchisees.
How many The Hot Spot franchise locations are there?
As of their most recent FDD filing, The Hot Spot has 9 total units in the United States, including 0 franchised units and 3 company-owned units. 6 new units were opened in the latest reporting year.
Is The Hot Spot a good franchise to buy?
FranchiseVerdict rates The Hot Spot as a A-grade franchise with a risk score of 21 out of 100, based on our analysis of investment costs, revenue data, SBA loan performance, and growth trends. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.