Risk Score
Pending analysis
Investment Range
$490,050 - $820,500
Franchise Fee
$30,000
Total US Locations
15
Business Summary
Manchu Wok operates retail quick service restaurants specializing in Chinese and Asian-style foods and drinks. Manchu Wok restaurants offer a selection of Chinese cuisine such as sweet and sour pork, crispy chicken wings, chicken balls, and mixed vegetables, along with soft drinks and other complementary items. Customers place, receive, and pay for their food purchases at the counter, with no wait service. These restaurants can be found in street-front locations, shopping mall food courts, or non-traditional locations like airports, casinos, and college campuses.
Corporate History
Manchu Wok's brand history traces back to Manchu WOK (USA), Inc., incorporated in Delaware on July 25, 2000, which offered franchises from October 2000. This was followed by Manchu WOK Franchising USA Inc., incorporated in 2004. The current franchisor, MTY Franchising USA, Inc., was incorporated in Delaware on March 14, 2001 (initially as The Extreme Pita Franchising USA, Inc.) and converted to a Tennessee Corporation on October 9, 2019. MTY Franchising USA, Inc. began offering Manchu Wok franchises in the United States in March 2015. The company is a wholly-owned subsidiary of MTY Franchising Inc. (MTY Canada), which is part of MTY Food Group, Inc., a public corporation operating over 55 different restaurant concepts with thousands of units. MTY Food Group has expanded significantly through acquisitions, including Kahala Brands (2016), Papa Murphy's (2019), BBQ Holdings (2022), Wetzel's Pretzels (2022), and Sauce Pizza and Wine (2022).
Financial Overview
Investment Range
$490,050 - $820,500
Franchise Fee (Low)
$30,000
Franchise Fee (High)
$30,000
Royalty %
7%
Marketing %
1%
Equipment Costs (Low)
$309,000
Equipment Costs (High)
$466,000
Working Capital
$22,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Manchu Wok's parent company, MTY Franchising USA, Inc., reported a net loss of $12,556 in 2024, a change from the net income of $16,978 reported in 2023. This loss was influenced by significant impairment charges totaling $43,602 in 2024, which affected its property, plant and equipment, intangible assets, and goodwill. Despite these financial fluctuations, the independent auditors have provided an unqualified opinion on the consolidated financial statements, indicating that they present fairly the financial position in all material respects. The company also maintains substantial long-term loans from its parent and other affiliated companies.
Financing Details
Manchu Wok does not offer any direct or indirect financing to its franchisees. Additionally, Manchu Wok does not guarantee any notes, leases, or other obligations that franchisees might incur.
Performance Metrics
Total US Locations
15
Franchised Units
15
Corporate Units
0
Avg Square Footage
675
Franchising Since
2015
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
20
Litigation Summary
Manchu Wok, through its various predecessors and affiliates, has a history of involvement in multiple litigation and arbitration cases. These cases cover a range of disputes, including breach of contract, misrepresentation, fraud, and violations of franchise investment laws. Some notable concluded cases involved substantial settlements or payments by the franchisor's affiliates, such as a $300,000 payment in a sweetFrog franchisee dispute, a $585,000 payment in a Baja Fresh predecessor case, and various settlements ranging from $5,000 to $4 million per group, plus store acquisitions, in Papa Murphy's International franchisee disputes. Manchu Wok has also been subject to state administrative actions related to franchise registration and disclosure compliance. For the fiscal year ending November 30, 2024, there are two recent lawsuits filed by Manchu Wok's affiliates against franchisees: one for breach of contract in Illinois by Kahala Franchising, L.L.C., and another for forcible entry and detainer in Iowa by Cold Stone Creamery Leasing Company, Inc.
Bankruptcy History
Manchu Wok states that no bankruptcy information is required to be disclosed for the franchisor or its key personnel.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
Manchu Wok reserves the right to offer a successor franchise agreement for a five-year term. To renew, franchisees must be offered and agree to enter into a new agreement with terms that may be materially different from the original, including potentially more demanding financial, legal, and operational conditions. Franchisees are required to pay a $15,000 Successor Franchise Fee upon signing this new agreement. Additionally, franchisees are obligated to renovate, alter, or upgrade their restaurant's premises, fixtures, and equipment every five years to align with the then-current Manchu Wok system image, which would be a condition for renewal.
Training & Support Program
Franchisor Assistance
Manchu Wok provides extensive support to its franchisees. Before opening, Manchu Wok assists with site selection and approval, provides building plans and contact lists for approved suppliers, and can sublease premises to the franchisee if needed. It also conducts a grand opening marketing campaign and loans copies of its confidential operating manuals. Initial training for the franchisee and one employee/manager is also provided. On an ongoing basis, Manchu Wok offers updates and revisions to its operating manuals, provides additional training as needed, and offers operational advice and guidance on the Manchu Wok Restaurant System. Special assistance is available upon request, though at the franchisee's expense. Manchu Wok also manages ongoing marketing and promotional programs through its marketing fund and provides guidance and materials. Franchisees are required to use specific POS and Digital Menu Systems.
Initial Training Hours
160
Training Location
A designated training restaurant or the Kahala Training & Education Center (KTEC) in Scottsdale, AZ, which may also include virtual options.
Ongoing Support
After opening, Manchu Wok provides ongoing operational advice and guidance on using the Manchu Wok Restaurant System, including assistance with local marketing programs, purchasing, administrative procedures, and employee training. Franchisees receive updates and revisions to the confidential operating manuals and can access additional training, seminars, and conventions. Manchu Wok also manages ongoing marketing and promotional programs, including national and regional advertising. Franchisees are required to participate in various System marketing and Restaurant monitoring programs, such as Internet-based initiatives, social media campaigns, and mystery shopper programs. A Franchisee Advisory Council may be established to discuss matters of common interest.
Franchise Requirements
Ideal Candidate Profile
Manchu Wok is seeking franchisees with strong capabilities and management skills to efficiently operate a quick service restaurant in a highly competitive industry. The successful operation of a Manchu Wok Restaurant relies significantly on the franchisee's best efforts and business acumen. The franchisee, or a designated manager with at least 10% equity in a corporate entity, must dedicate full-time efforts to on-premises supervision of the restaurant and be responsible for its operation and management.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
Full-Time
Territory Type
Non-Exclusive
Territory Size Requirements
Manchu WOK franchisees will not receive an exclusive territory and may face competition from other franchisees, company-owned outlets, or other distribution channels. The franchise is granted for a specific approved location, which will be described in the Franchise Agreement. While operating at this approved location, neither the franchisor nor its affiliates will open another Manchu WOK Restaurant at the same approved location. The Franchise Agreement also refers to a 'Trade Area' but does not specify its size or geographic boundaries within this document. Manchu WOK franchisees are prohibited from providing off-premises sales or services such as off-site delivery; all products must be sold at the restaurant premises to physically present customers.
Staffing Notes
Manchu Wok requires that at least two employees who have successfully completed the initial training operate the restaurant, with one of them designated as the Manager. This Manager, who may be the individual franchisee or a shareholder owning at least 10% of a corporate franchisee, must devote their full-time efforts to on-premises supervision and be responsible for the restaurant's daily operation and management. All employees who operate the Manchu Wok Restaurant are required to sign a Confidentiality and Non-competition Agreement. Manchu Wok also sets specific dress codes, uniform standards, and personal appearance guidelines for its employees.