Deli Delicious Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$122,800 - $474,350
Franchise Fee
$12,500
Total US Locations
44
Business Summary
Deli Delicious operates upscale deli restaurants, offering a wide variety of fresh, high-quality deli sandwiches, salads, side dishes, and beverages in a casual and relaxed environment. Deli Delicious provides franchises for two models: an Express Model, a non-traditional restaurant selling products made on-site, and a Standard Model, which is a permanent, in-line or stand-alone structure. Both models focus on counter service and takeout, aiming to be an alternative to fast food by using proprietary recipes and fresh ingredients. Deli Delicious restaurants also offer catering and delivery services, and may include private party accommodations, prepackaged food items, sauces for retail sale, and apparel.
Corporate History
Deli Delicious Franchising Inc. was incorporated in California on August 27, 2008, specifically to offer franchises for Deli Delicious restaurants. However, the business concept originated earlier, as its owner, Mohammad Hobab, founded and began operations as a sole proprietorship under the 'Deli Delicious' name on February 2, 1996. These initial predecessor restaurants, similar to the current franchised model, were later transferred. Deli Delicious Franchising Inc. has not engaged in any other business activities or offered franchises in other lines of business since its incorporation.
Financial Overview
Investment Range
$122,800 - $474,350
Franchise Fee (Low)
$12,500
Franchise Fee (High)
$30,000
Royalty %
6%
Marketing %
2.5%
Equipment Costs (Low)
$64,200
Equipment Costs (High)
$329,000
Working Capital
$16,750
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Deli Delicious Franchising Inc.'s financial condition, as reflected in its financial statements, raises concerns about its ability to provide services and support to franchisees, primarily due to a negative net worth. While the company had positive working capital of $122,651 as of December 31, 2023, it reported a negative accumulated deficit of $496,329 for the same year. In the prior year, December 31, 2022, the company also had a negative accumulated deficit of $583,511 and negative working capital of $147,517.
Financing Details
Deli Delicious Franchising Inc. does not offer any direct or indirect financing to its franchisees. This means that franchisees will need to secure all necessary funding for their Deli Delicious restaurant through third-party lenders or other financial institutions. The franchisor also does not guarantee any notes, leases, or other financial obligations for its franchisees.
Performance Metrics
Total US Locations
44
Franchised Units
44
Corporate Units
0
Avg Square Footage
750
Franchising Since
2008
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
5
Litigation Summary
Deli Delicious Franchising Inc. has been involved in several lawsuits. In one case, a former employee sued Deli Delicious Franchising Inc. and its officers for defamation and interference; Deli Delicious Franchising Inc. cross-complained for breach of loyalty and trade secret misappropriation. This case settled in December 2023 with Deli Delicious Franchising Inc. paying $60,000. In another instance, Deli Delicious Franchising Inc. sued a franchisee for failing to comply with franchise agreements regarding purchasing bread from designated vendors and displaying digital menu boards. Deli Delicious Franchising Inc. secured a preliminary injunction, and the franchisee filed a class action cross-complaint alleging violations of business codes, anti-trust laws, breach of contract, and fraud. The class was not certified, and in June 2021, the case settled with the franchisee paying Deli Delicious Franchising Inc. $205,000. Another lawsuit saw Deli Delicious Franchising Inc. suing a franchisee for non-compliance with brand standards including signage, bread purchasing, and digital menu boards. The franchisee cross-complained alleging breach of contract, fraud, and violations of franchise investment laws, among other claims. While Deli Delicious Franchising Inc. obtained a preliminary injunction, an arbitrator later denied damages to both parties. The franchisee is no longer part of the Deli Delicious system, and the parties have agreed to dismiss the remaining court claims. Separately, a plaintiff sued Deli Delicious Franchising Inc. and its President for false advertising and unfair competition. This case settled in February 2024, with all claims dismissed. Finally, Deli Delicious Franchising Inc. sued a law group for breach of fiduciary duty and misuse of confidential information. This arose from the law group representing franchisees in cases against Deli Delicious Franchising Inc. despite having previously represented the franchisor. This case settled in December 2023, with the law group agreeing to dismiss the false advertising lawsuit and refraining from future litigation or representation against Deli Delicious Franchising Inc. or its principals.
Bankruptcy History
Deli Delicious Franchising Inc. has no bankruptcy history to report.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their Deli Delicious franchise agreement, franchisees must meet several conditions. They need to provide Deli Delicious Franchising Inc. with written notice of their intent to renew between 6 and 13 months before the current agreement expires. Franchisees must have the right to lease the premises for an additional 10 years or secure a substitute location that Deli Delicious Franchising Inc. approves. All maintenance, refurbishing, renovating, and remodeling of the restaurant, equipment, fixtures, furnishings, and signs must be completed to reflect the current Deli Delicious image. Franchisees must not be in default of any agreement with Deli Delicious Franchising Inc. or its affiliates and must have substantially complied with all agreements throughout their term. All monetary obligations to Deli Delicious Franchising Inc. and its affiliates must be satisfied. Franchisees will be required to sign Deli Delicious Franchising Inc.'s then-current franchise agreement and renewal addendum, which may have materially different terms, though renewal fees will not exceed those in the then-current Franchise Disclosure Document. They must also meet the then-current training requirements for new franchisees and pay a renewal fee equal to 50% of the then-current initial franchise fee for their restaurant model. Finally, franchisees must execute a general release of any and all claims against Deli Delicious Franchising Inc. and its related parties, except for any liabilities protected by state franchising laws. Deli Delicious Franchising Inc. reserves the right to re-evaluate and potentially modify the franchisee's territory upon renewal based on demographics and its standards.
Training & Support Program
Franchisor Assistance
Before a Deli Delicious restaurant opens, Deli Delicious Franchising Inc. provides site selection guidelines and assists in reviewing and approving proposed sites and leases. It also provides standard specifications for building and furnishing the restaurant, including required computer and technology systems, and construction plans must be approved. Franchisees receive a copy of the Confidential Operations Manual and a list of approved products and suppliers. Initial training for up to two people (franchisee/operating principal and general manager) is also provided. Once a Deli Delicious restaurant is open, ongoing assistance includes periodic visits and evaluations to ensure quality and service standards are maintained. Deli Delicious Franchising Inc. offers advice and written materials, including updates to the Operations Manual, and provides a telephone hotline during business hours for questions. Training programs, seminars, and franchisee meetings may be held, with attendance sometimes being mandatory. Additional on-site training or assistance is available upon request or if deemed necessary, for which the franchisee must pay a fee and reimburse expenses. Deli Delicious Franchising Inc. also administers the Brand Development Fund and reserves the right to approve or designate minimum and maximum prices for products sold.
Initial Training Hours
133
Training Location
Corporate Headquarters in Fresno, CA or virtually
Ongoing Support
After opening, Deli Delicious Franchising Inc. provides ongoing support through various means. This includes regular visits and evaluations of the restaurant, products, and services to ensure high standards of quality, appearance, and service are maintained. Franchisees receive ongoing advice and written materials, such as updates to the Operations Manual, regarding management and operations, including new developments in equipment, food products, and recipes. A telephone hotline is available during regular business hours (Pacific Time Zone) for questions and guidance. Deli Delicious Franchising Inc. may also hold training programs, seminars, and franchisee meetings, which can be mandatory for franchisees, general managers, and other personnel. Additional on-site training can be provided at the franchisee's request or if deemed necessary by Deli Delicious Franchising Inc., for which fees and expenses will apply. Deli Delicious Franchising Inc. also administers the Brand Development Fund for the benefit of franchisees and reserves the right to approve or designate minimum and maximum prices for products sold.
Franchise Requirements
Ideal Candidate Profile
Deli Delicious is looking for owner-operators to establish and run their upscale deli restaurants. For entity franchisees, an Operating Principal, holding at least 10% equity, must personally participate in the restaurant's daily operations and be authorized to make all operational decisions. All franchisees, or their Operating Principals, along with a full-time General Manager, are required to complete initial training and obtain ServSafe Manager Training certification. All employees must sign confidentiality agreements, and spouses of owners are also required to sign a personal guaranty.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
hands-on
Territory Type
Protected
Territory Size Requirements
Deli Delicious Franchising Inc. may offer a protected territory to its franchisees, which would generally be a geographic area not exceeding 2 miles. In densely populated urban areas, this protected territory could be as small as a city block. The specific boundaries of the protected territory will be identified in Exhibit 1 of the Franchise Agreement. However, Deli Delicious Franchising Inc. explicitly states that franchisees will not receive an exclusive territory in a broader sense and retains the right to operate or license businesses under other names, or distribute products through alternative channels or at 'Special Sites' both within and outside a franchisee's designated territory.
Staffing Notes
Deli Delicious requires the franchisee (or an Operating Principal, if an entity) to personally participate in the restaurant's operations. The Operating Principal must hold at least 10% equity and have the authority to make all operational decisions. Additionally, each Deli Delicious restaurant must have a full-time General Manager who is responsible for direct, on-premises supervision during all operating hours. The General Manager does not need an equity interest in the franchise. Both the franchisee (or Operating Principal) and the General Manager must attend and satisfactorily complete the initial training program and obtain ServSafe Manager Training certification. Franchisees are solely responsible for all employment decisions, including hiring, firing, compensation, and implementing employee training programs in accordance with Deli Delicious's standards. All employees must sign confidentiality agreements. Franchisees must clearly communicate to their employees that they are employed by the franchisee, not Deli Delicious Franchising, Inc.