NrGize Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$89,410 - $454,300
Franchise Fee
$4,000
Min Cash Required
$5,000
Total US Locations
57
Business Summary
NrGize Lifestyle Cafe offers unit franchises for a restaurant concept specializing in preparing and serving low-calorie smoothies, fruit drinks, nutritional supplements, and other beverage and food items. These restaurants operate under the NrGize Lifestyle Cafe brand.
Corporate History
Kahala Franchising, L.L.C., the franchisor of NrGize Lifestyle Cafe, was formed as an Arizona limited liability company on December 29, 2008. The company is in the business of franchising quick service restaurants. Its parent company is Kahala Brands, Inc., which merged with MTY Food Group, Inc. in 2016, making MTY Franchising USA, Inc. its ultimate parent. NrGize Lifestyle Cafe franchises have been offered since April 2006 under the predecessor, Kahala Franchise Corp., and since August 2010 under Kahala Franchising. Affiliates, Kahala Holdings, L.L.C. and Kahala Restaurants, L.L.C., have operated corporate NrGize Lifestyle Cafe restaurants since February 2009 and January 2010, respectively. Kahala Franchising is part of a large family of MTY brands that includes over 50 different restaurant concepts in the United States and more than 55 in Canada and other international countries.
Financial Overview
Investment Range
$89,410 - $454,300
Franchise Fee (Low)
$4,000
Franchise Fee (High)
$30,000
Minimum Cash Required
$5,000
Royalty %
6%
Marketing %
0.5%
Equipment Costs (Low)
$56,000
Equipment Costs (High)
$335,000
Working Capital
$10,000
Audited Financials
Yes
Offers Financing
Yes
Financial Health Notes
NrGize Lifestyle Cafe's financial statements are audited consolidated financial statements of its parent company, MTY Franchising USA, Inc. The FDD notes that MTY Franchising USA, Inc. (referred to as "Guarantor") absolutely and unconditionally guarantees the duties and obligations of Kahala Franchising, L.L.C. under its franchise registration and the Franchise Agreement. This guarantee remains in effect until all franchisor obligations are satisfied or discharged. The Guarantor is not relieved of liability if a franchisee claim against the franchisor remains outstanding, and the guarantee is binding on the Guarantor's successors and assigns. This indicates a solid financial backing for NrGize Lifestyle Cafe through its parent company, which should provide confidence regarding the franchisor's ability to meet its financial obligations and support the franchise system.
Financing Details
NrGize Lifestyle Cafe does not offer direct or indirect financing or financing arrangements to franchisees, nor does it guarantee their obligations under notes or other commitments, except in specific, limited circumstances and at its sole discretion. This includes potentially guaranteeing a franchisee's lease for a site or providing financing if a franchisee purchases an existing corporate-owned restaurant from one of NrGize Lifestyle Cafe's affiliates. If a franchisee purchases a corporate-owned restaurant from an affiliate, NrGize Lifestyle Cafe may finance up to 100% of the purchase price. The interest rate on such financing would range from 0% to 12% annually, depending on the franchisee's creditworthiness, the amount being financed, and the upfront payment. Repayment periods typically range from 12 to 60 months, with equal monthly installments. NrGize Lifestyle Cafe requires a first lien position on all equipment as security for the debt. Franchisees would be required to personally guarantee the debt, along with their spouses if married. In the event of default, the entire amount due may be accelerated, and the interest rate could increase to 18%. NrGize Lifestyle Cafe's affiliate would also have the right to take back the restaurant. The franchisee would waive certain legal rights, including contesting the take-back rights and receiving no compensation after such rights are exercised. For lease guarantees, if a landlord requires a third-party guarantee and NrGize Lifestyle Cafe or an affiliate agrees to serve as guarantor, the franchisee would pay a lease guarantee fee equal to 10% of the total guaranteed rental obligations, up to a maximum of $10,000. This fee is non-refundable. The decision to act as a guarantor is entirely at NrGize Lifestyle Cafe's discretion. NrGize Lifestyle Cafe does not arrange financing from other sources or receive payments for placing financing.
Performance Metrics
Total US Locations
57
Franchised Units
57
Corporate Units
0
Franchising Since
2006
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
21
Litigation Summary
NrGize Lifestyle Cafe's FDD discloses a total of 21 litigation cases. Historically, various affiliates and predecessors of Kahala Franchising, L.L.C. have been involved in a range of disputes, including cases alleging violations of franchise investment laws, misrepresentation of financial performance, breach of contract, unjust enrichment, and actions related to bankruptcy. These cases involved former franchisees and public agencies, with many of them settling confidentially or being dismissed. For example, a case against a predecessor regarding misrepresentation under Washington's Franchise Investment Protection Act was settled in 2016 for $20,000. Another notable case involved a former sweetFrog franchisee who alleged fraud and unfair practices, which was settled in 2015 for $300,000. Additionally, the FDD mentions various state administrative actions against predecessors and affiliates for issues like unregistered franchise offers or disclosure violations, which were typically resolved through consent orders or settlement orders. More recently, within the fiscal year December 1, 2023, through November 30, 2024, Kahala Franchising, L.L.C. initiated two lawsuits against franchisees. One case, filed in Illinois, is a suit for breach of contract against All About Food, Inc. and Chu Yup Lee. The other, filed in Iowa, is a suit for forcible entry and detainer by Cold Stone Creamery Leasing Company, Inc. against JRF, Inc. The outcomes of these recent cases are not yet disclosed, indicating they were ongoing as of the FDD's issuance.
Bankruptcy History
NrGize Lifestyle Cafe's FDD states that no bankruptcy information is required to be disclosed in Item 4, which means there is no reportable bankruptcy history for Kahala Franchising, L.L.C. or its affiliates that would necessitate disclosure under federal or state law.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their NrGize Lifestyle Cafe franchise, franchisees must meet several conditions. They need to provide at least 120 days' notice before their current agreement expires. Franchisees must be in full compliance with their existing Franchise Agreement and the Confidential Manual, without any outstanding defaults. They should not have received more than three default notices during the current term, or more than two notices in the five years immediately preceding the renewal date. Franchisees must have a suitable premises or secured a new one that meets current site requirements. They are required to sign a new Franchise Agreement, which may have different terms and conditions, including potentially higher royalty and advertising fees. A renewal franchise fee must be paid, and the franchisee must agree to remodel or refurbish their location to meet current NrGize Lifestyle Cafe system specifications. All financial obligations to NrGize Lifestyle Cafe must be current, and the franchisee must sign a general release of claims. NrGize Lifestyle Cafe reserves the right to reject a renewal application for any reason, including failure to meet current standards for new franchisees.
Training & Support Program
Franchisor Assistance
NrGize Lifestyle Cafe provides comprehensive assistance to its franchisees, covering both pre-opening and ongoing support. Before opening, for traditional and non-LA Fitness locations, NrGize Lifestyle Cafe helps with site selection, provides design drawings, identifies necessary furnishings, fixtures, equipment, and supplies, and establishes operational standards. For locations within LA Fitness health clubs, NrGize Lifestyle Cafe assists with selecting an LA Fitness club, and the franchisee is responsible for overseeing construction and equipping the unit to meet both NrGize Lifestyle Cafe's and LA Fitness's standards. All NrGize Lifestyle Cafe franchisees receive a Confidential Operations Manual, a list of approved distributors and suppliers, and a Training Program for two individuals (56 hours, including classroom and in-store training in Scottsdale or Phoenix, Arizona, or online). A company representative also provides up to three days of on-site support during the grand opening. Ongoing support includes a continuing advisory relationship for marketing, merchandising, and general business operations. NrGize Lifestyle Cafe provides updates on operating standards, conducts periodic inspections and quality service checks, and offers information on software for administrative, bookkeeping, accounting, and inventory control. They also review and approve any proposed relocation. Franchisees have the option for a one-time renewal of their Franchise Agreement. Additionally, NrGize Lifestyle Cafe may offer informal training sessions and hold mandatory refresher/additional training programs, conferences, and seminars, which may require a registration fee and travel expenses from the franchisee. NrGize Lifestyle Cafe can also provide recommendations regarding product pricing and assistance with operating problems upon request.
Initial Training Hours
56
Training Location
Scottsdale, Arizona or Phoenix, Arizona area, or online
Ongoing Support
After opening, NrGize Lifestyle Cafe franchisees receive a range of ongoing support services. The franchisor provides a continuing advisory relationship, offering consultation and guidance on marketing, merchandising, and general business operations. Franchisees receive updated information on operating and other standards. Periodic evaluations and inspections of the restaurant are conducted by field representatives to ensure compliance with system standards and quality service. NrGize Lifestyle Cafe also makes franchisees aware of available software from approved third-party vendors to assist with administrative, bookkeeping, accounting, and inventory control procedures. The franchisor must review and approve any substitute locations if a franchisee desires to relocate. NrGize Lifestyle Cafe may hold refresher or additional training programs, conferences, and seminars, which franchisees are required to attend. These events may have a nominal registration fee, and franchisees are responsible for their own travel, food, lodging, and other personal expenses. There is no advertising council composed of NrGize Lifestyle Cafe franchisees that advises on advertising policies currently. However, a marketing plan for grand opening and initial advertising is created by the franchisor, with franchisee input.
Franchise Requirements
Ideal Candidate Profile
NrGize Lifestyle Cafe seeks franchisees who intend to actively participate in the direct operation and daily affairs of their restaurant, rather than those looking for a passive investment. The franchisor strongly recommends that owners devote a substantial amount of time to their NrGize Lifestyle Cafe restaurant, even if they hire a manager. The business must be personally managed with on-premises supervision by the owner or a qualified manager who has successfully completed the required training program. Ideal candidates are expected to have work experience and aptitude, the ability to devote their best efforts to the business, and a sufficient equity interest. They should also possess the ability to speak and read English well enough to communicate effectively with employees, customers, and suppliers, and have no conflicting interests. Franchisees and their employees who interact directly with the public must be able to speak and read English, and managers on each shift must be able to read and understand written materials and communicate in English.
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
Non-Exclusive
Territory Size Requirements
NrGize Lifestyle Cafe franchisees will not receive an exclusive territory. Franchisees may face competition from other NrGize Lifestyle Cafe franchisees, company-owned NrGize Lifestyle Cafe restaurants, or other distribution channels and competitive brands controlled by the franchisor. There are no options, rights of first refusal, or other rights under the Franchise Agreement to acquire additional franchises. The franchisor and its affiliates may establish other franchised or company-owned NrGize Lifestyle Cafe restaurants, even in the immediate vicinity of a franchisee's location or in the same venue.
Staffing Notes
NrGize Lifestyle Cafe requires that franchisees employ at least one full-time, on-premises supervisor, referred to as the "Manager," for the restaurant. This Manager must meet NrGize Lifestyle Cafe's criteria as a qualified restaurant operator and dedicate their entire time during normal business hours to the management, operation, and development of the franchised business. Managers are also required to sign a Confidentiality Agreement and must be able to read and understand NrGize Lifestyle Cafe's written materials and communicate in English with employees and customers while on shift, to ensure safe and efficient job performance and public safety. Franchisees are solely responsible for hiring, firing, training, supervising, and determining the employment terms and conditions for all other employees, as well as maintaining employment records. NrGize Lifestyle Cafe emphasizes that its system standards protect its interests, not to control franchisee employees or daily operations. All personnel must maintain established standards of sanitation, cleanliness, and demeanor and wear uniforms approved by NrGize Lifestyle Cafe. While NrGize Lifestyle Cafe provides training for the franchisee and certain key personnel, the specific number of general staff beyond the manager is not prescribed, allowing for flexibility based on business needs, but all must be adequately trained in NrGize Lifestyle Cafe procedures.