Risk Score
Pending analysis
Investment Range
$1,507,000 - $2,334,000
Franchise Fee
$25,000
Min Cash Required
$240,000
Total US Locations
36
Business Summary
Honest operates fast-casual restaurants specializing in freshly prepared, non-frozen Indian street food dishes. These dishes are cooked to order and offered in a traditional Indian restaurant, cafeteria, or canteen setting. Customers can dine in, or order through catering, delivery, and carry-out services.
Corporate History
Honest Hospitality Group LLC was organized in Texas on January 19, 2016, and began offering Honest franchises in March 2016. The company previously offered, but did not sell, area development franchises, stopping these offers in June 2021. Honest Hospitality Group LLC entered into manufacturing and distribution agreements with third parties for its proprietary products. The brand's affiliate, The Honest Reveira, an Indian partnership formed in 2006, has offered similar franchises in India since 2006. In August 2016, Reveira assigned ownership of the "Honest" trademarks to Honest Hospitality Group LLC and subsequently licensed the right to use the Honest System and intellectual property to the franchisor. Another affiliate, Honest International Foods Private Limited, formed in India in July 2019, may supply proprietary spices and bakery products to franchisees.
Financial Overview
Investment Range
$1,507,000 - $2,334,000
Franchise Fee (Low)
$25,000
Franchise Fee (High)
$25,000
Minimum Cash Required
$240,000
Royalty %
5.5%
Marketing %
1%
Equipment Costs (Low)
$810,000
Equipment Costs (High)
$1,250,000
Working Capital
$300,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Honest Hospitality Group LLC appears to be in sound financial health, showing positive and growing net income, members' equity, and cash flow from operations for the years ended December 31, 2023, and 2022. The net income for 2023 was $1,573,527, and for 2022 was $1,083,378. The company's members' equity also increased from $559,199 in 2022 to $1,209,347 in 2023. Cash provided by operating activities was $1,490,909 in 2023, up from $867,340 in 2022. A minor point of note is that in 2023, Honest Hospitality Group LLC had $716,025 of uninsured cash balances, which is a concentration of credit risk. The company also has a small long-term auto loan of approximately $33,000 as of 2023. Overall, the audited financial statements present a favorable financial position.
Financing Details
Honest Hospitality Group LLC does not offer any direct or indirect financing to its franchisees. The franchisor also does not guarantee any notes, leases, or other obligations that franchisees might incur.
Performance Metrics
Total US Locations
36
Franchised Units
36
Corporate Units
0
Avg Square Footage
3,250
Franchising Since
2016
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
Honest Hospitality Group LLC has no litigation to report in Item 3 of its Franchise Disclosure Document. The franchisor or its management have not been involved in any material litigation or bankruptcy proceedings that require disclosure.
Bankruptcy History
Honest Hospitality Group LLC has no bankruptcy history to report. Neither the franchisor nor its management have been involved in any bankruptcy proceedings that require disclosure in Item 4 of its Franchise Disclosure Document.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew the franchise agreement, Honest franchisees must meet several conditions. The franchisor must still be offering franchises in the area where the restaurant is located. Franchisees must provide written notice of their intent to renew between six and nine months before the initial term expires. Throughout the initial term and at the time of renewal, franchisees must have fully complied with all material obligations of the franchise agreement, manual, and other agreements. All monetary obligations to Honest Hospitality Group LLC, its affiliates, landlord, and suppliers must be current. Before the renewal term begins, franchisees must refurbish, redesign, or remodel their restaurant to meet Honest Hospitality Group LLC's then-current standards. They (or their Operating Principal and designated staff) must attend and successfully complete any required training at their own expense. A renewal fee of 50% of the then-current Initial Franchise Fee for Honest Businesses is required. Franchisees must be able to renew their current lease or secure an approved new location without business interruption, and they must sign Honest Hospitality Group LLC's then-current form of General Release.
Training & Support Program
Franchisor Assistance
Honest Hospitality Group LLC provides comprehensive assistance to its franchisees. Before opening, Honest Hospitality Group LLC helps with site selection and approval, reviews and approves lease or purchase agreements, and provides specifications and approval for the restaurant's layout, plans, and construction. They also provide initial training for the franchisee and Operating Principal at no charge (though travel and living expenses are the franchisee's responsibility) and up to 10 days of on-site support during the first restaurant's opening. Franchisees receive a confidential operating manual and specifications for required products and services, including proprietary products from an affiliate. Honest Hospitality Group LLC specifies required accounting and Computer and Point of Sale Systems, with independent access to the franchisee's data. After opening, Honest Hospitality Group LLC offers ongoing field support, supervision, and assistance through on-site visits, off-site sessions, and electronic communication. Franchisees can also contact headquarters for consultation. Honest Hospitality Group LLC provides standard electronic accounting forms, continues to approve advertising materials, and furnishes specifications for products and services. They reserve the right to guide pricing strategies and require restaurant updates or remodels once per term. Ongoing training programs, including annual conferences, may be required. Honest Hospitality Group LLC manages all internet, worldwide web, and social media activities related to the brand, providing a 'click through' subpage for each franchisee's restaurant while prohibiting franchisees from creating their own websites or social media presence without consent.
Initial Training Hours
128
Training Location
Franchisee's location (expected) or Franchisor's designated location, which may include a currently operating Honest Restaurant in India or the United States, or headquarters in Ahmedabad, India.
Ongoing Support
After an Honest restaurant opens, Honest Hospitality Group LLC provides ongoing field support, supervision, and assistance through on-site visits, off-site sessions, and various communication methods, with timing subject to personnel availability. Franchisees can contact headquarters for consultation and guidance on business operations. Honest Hospitality Group LLC furnishes standard electronic accounting forms and reports and reviews and approves all franchisee-proposed advertising materials. They continue to provide specifications for required products and services, including proprietary items sold through an affiliate. Honest Hospitality Group LLC may also guide pricing strategies and can require the restaurant to be updated, remodeled, or redesigned once during the initial and each renewal term. Additionally, Honest Hospitality Group LLC may develop and require attendance at additional training programs, and franchisees (or their Operating Principal) must attend annual conferences, conventions, or training sessions.
Franchise Requirements
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
non-exclusive
Territory Size Requirements
Honest Hospitality Group LLC defines a franchisee's territory as a geographic area embraced by a circle with a specific radius from the Honest restaurant location. This radius is half (0.5) a mile if the restaurant is in an urban area, three (3) miles if in a suburban area, or five (5) miles if in any other area. Urban and suburban definitions follow the United States Census Bureau guidelines. However, if Honest Hospitality Group LLC approves a restaurant at a non-traditional location, that location will not have any defined territory.
Staffing Notes
Honest Hospitality Group LLC requires franchisees to maintain a competent, conscientious, and trained staff in sufficient numbers to promptly, efficiently, and effectively service customers, ensuring good customer relations. The franchisor specifies that franchisees must employ an Operating Principal who has complete decision-making authority and acts on the franchisee's behalf. If the franchisee is an individual, they must serve as the Operating Principal. If the franchisee is a business entity, they must designate an approved individual, typically a majority owner, as the Operating Principal. All Operating Principals must successfully complete the initial training program. Additionally, franchisees must designate a Restaurant Manager responsible for day-to-day operations and on-premises supervision. Any successor Operating Principals or Restaurant Managers must also be approved and trained. While the franchisor ensures minimal staffing levels are met, franchisees retain the right to staff their restaurant with as many employees as desired.