Risk Score
Pending analysis
Investment Range
$1,233,300 - $4,075,000
Franchise Fee
$45,000
Total US Locations
292
Business Summary
Hooters Restaurants are casual bar and grill/sports bar restaurants that offer a menu featuring chicken wings, burgers, seafood, and other food and beverage options, including alcoholic beverages. The restaurants are distinguished by the presence of "Hooters Girls," whose primary role is to entertain and interact with guests while serving food and drinks.
Corporate History
HOA Franchising, LLC was organized on April 28, 2014, in Delaware. It serves as the franchisor for Hooters Restaurants, which are casual bar and grill/sports bar establishments known for their menu of chicken wings, seafood, burgers, alcoholic beverages, and the distinctive "Hooters Girls." The company has been offering Hooters franchises since its formation in 2014. In August 2014, existing development agreements were transferred to HOA Franchising, LLC from HOA, which is now a parent entity and provides management services to the franchisor. The broader Hooters brand, however, has a history predating HOA Franchising, LLC, with references to entities like Hooters, Inc. operating since at least 2006. Affiliates of HOA Franchising also operate "hoots wings" restaurants and virtual brands such as "Hootie's Burger Bar."
Financial Overview
Investment Range
$1,233,300 - $4,075,000
Franchise Fee (Low)
$45,000
Franchise Fee (High)
$50,000
Royalty %
5%
Marketing %
2%
Equipment Costs (Low)
$980,000
Equipment Costs (High)
$3,480,000
Working Capital
$87,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Going concern qualification
Financial Health Notes
The financial statements of HOA Franchising, LLC's parent company, HOA Holdco, LLC, raise concerns regarding the franchisor's financial ability to provide services and support to franchisees. This indicates a potential risk to the company's ongoing financial health.
Financing Details
Hooters does not offer any direct or indirect financing to its franchisees. The company also does not guarantee any notes, leases, or other financial obligations that franchisees may incur.
Performance Metrics
Total US Locations
292
Franchised Units
97
Corporate Units
195
Avg Square Footage
6,250
Franchising Since
2014
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
9
Litigation Summary
HOA Franchising has disclosed 9 litigation cases. Two of these cases are recent, occurring within the last three years from the FDD issuance date, and one is still ongoing. The pending case, filed in September 2023, is against a former franchisee and its owner for alleged breach of contract, breach of guaranty, trademark infringement, and unfair competition, seeking about $500,000 in damages. A preliminary injunction was issued in December 2023, and a defendant filed a counterclaim for $10 million in May 2024. The former franchisee also filed for bankruptcy, temporarily pausing proceedings against that entity. Another recent case, filed in December 2022, involved HOA Franchising suing a former franchisee who converted their Hooters restaurant into a competing concept. This case was settled in February 2023, with the franchisee paying HOA Franchising $181,725 in liquidated damages and an additional $55,000, along with agreeing to comply with post-termination non-compete obligations. The remaining seven cases were concluded between 2015 and 2023, with most resulting in settlements. These included disputes with franchisees regarding exclusive development rights, abandonment of restaurants, failure to meet financial obligations, and trademark infringement. One arbitration case from 2019 led to an award of over $337,000 to an affiliate of HOA Franchising in December 2022, alongside a permanent injunction against the franchisee.
Bankruptcy History
HOA Franchising has no bankruptcy information to disclose in this item.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise agreement, Hooters franchisees must first provide written notice of their request to renew between 6 and 18 months before the initial term expires. They must pay a renewal fee equal to the greater of $25,000 or 25% of the then-current initial franchise fee. Franchisees must be in full compliance with all agreements with the franchisor and its affiliates, have maintained substantial compliance with the operations manuals, and be current on all obligations to lessors, suppliers, and other third parties. Additionally, they must sign the franchisor's then-current renewal franchise agreement, which may have materially different terms, and execute a general release with the franchisor and its owners.
Training & Support Program
Franchisor Assistance
Before opening, Hooters provides franchisees with advice and guidance on site selection, lists of approved suppliers, renovation criteria, and optionally, architectural plans. The company trains the franchisee's salaried general manager and offers resources for training hourly employees. It also loans a copy of its operations manuals, provides System Standards, and furnishes plans and materials for local advertising at the franchisee's expense. After opening, Hooters provides ongoing advisory assistance in operations, training, advertising, and promotion. This includes refresher training programs, merchandising and marketing data, and periodic individual or group consultation through visits, phone calls, newsletters, or bulletins. The company also furnishes System Standards and will, upon request (not more than once a year), provide annual financial statements of the National Advertising Fund. Hooters also establishes, maintains, and administers a system-wide National Ad Fund.
Initial Training Hours
800
Training Location
Corporate headquarters in Atlanta, Georgia and other designated locations, with on-site opening training at the franchisee's restaurant.
Ongoing Support
After opening, Hooters provides franchisees with continuing advisory assistance in the operation, training, advertising, and promotion of their Hooters Restaurant. This includes refresher training programs for franchisees and their employees, local advertising plans and materials (at the franchisee's expense), and merchandising/marketing data and advice. Franchisees receive periodic individual or group advice, consultation, and assistance via personal visits, telephone, newsletters, or bulletins. Hooters also provides System Standards and, upon request (not more than once a year), annual financial statements for the National Ad Fund. Additionally, the company may conduct conferences, conventions, webinars, or other additional training sessions as needed.
Franchise Requirements
Ideal Candidate Profile
Hooters emphasizes that the success of a franchisee's restaurant heavily depends on their business skill, effort, and business acumen. If the franchisee is an entity, the owner and a designated General Manager (who may be the same person) must personally participate in the management and operation of the restaurant, dedicating their full time, energy, and best efforts to its promotion and operation. Only individuals who have successfully completed the franchisor's Initial Training Program and any additional required training may manage a Hooters Restaurant. Owners must also sign an Owners Guaranty, and spouses may be required to do so if marital assets are used to qualify financially for the franchise.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
Hands-On
Territory Type
Protected
Territory Size Requirements
Hooters designates a "Protected Market Area" for each franchised business, which may be irregularly shaped and defined using Google Earth/Google Maps or other GPS or population mapping software. The size of this area is determined based on factors like population density (both residential and daytime), per capita income, proximity to malls, shopping centers, business parks, industrial parks, airports, traffic patterns, commercial development, and competition. While these factors are considered, Hooters does not guarantee a minimum population for the Protected Market Area. For Development Agreements, the "Development Area" is negotiated and can vary based on metropolitan statistical areas, groups of zip codes, or other municipal or geographic boundaries.
Staffing Notes
Hooters Restaurants require franchisees to employ a sufficient number of trained and qualified personnel to operate the business. Franchisees are solely responsible for hiring, firing, compensating, and directing their employees. If a franchisee operates multiple Hooters Restaurants, they must employ an adequate number of qualified regional managers to meet the company's System Standards. All management personnel and any employees who have access to confidential information must sign a confidentiality and non-competition agreement.