Risk Score
Pending analysis
Investment Range
$332,600 - $680,180
Franchise Fee
$22,500
Total US Locations
20
Business Summary
Phở Hòa® restaurants offer casual dining with table service, specializing in authentic Vietnamese noodle soups and plate dishes. These meals are prepared using proprietary recipes and fresh ingredients, designed to appeal to customers who are health-conscious.
Corporate History
South Bay Soup Corporation, the franchisor for Phở Hòa® restaurants, was organized in 2005 with the purpose of offering, selling, and administering Phở Hòa® franchises. The Phở Hòa® restaurant concept itself dates back to 1983 when the original founders opened the first restaurant in Santa Ana, California. The founder of South Bay Soup Corporation, Mr. Binh Nguyen, was involved with developing the Phở Hòa® concept in San Jose, California, starting in 1984. In 1986, Mr. Nguyen helped form an Operating Affiliate which began offering Phở Hòa® restaurant franchises in 1992. South Bay Soup Corporation officially took over as the franchisor for the Phở Hòa® program in 2005.
Financial Overview
Investment Range
$332,600 - $680,180
Franchise Fee (Low)
$22,500
Franchise Fee (High)
$30,000
Royalty %
4%
Equipment Costs (Low)
$170,000
Equipment Costs (High)
$355,000
Working Capital
$37,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Phở Hòa®'s financial condition, as shown in its financial statements, raises questions about the franchisor's ability to provide services and support to its franchisees. This is highlighted as a special risk to consider about the franchise.
Financing Details
Phở Hòa® does not offer any direct or indirect financing to its franchisees. The franchisor also does not guarantee any obligations franchisees might have with third parties. If a franchisee obtains financing from a third-party lender that is guaranteed by the U.S. Small Business Administration (SBA), they are required to execute a specific amendment to their Franchise Agreement.
Performance Metrics
Total US Locations
20
Franchised Units
17
Corporate Units
3
Avg Square Footage
2,300
Franchising Since
2005
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
Phở Hòa® has no litigation history to report. The franchisor explicitly states that no litigation is required to be disclosed in Item 3 of its Franchise Disclosure Document.
Bankruptcy History
Phở Hòa® has no bankruptcy history to report. The franchisor explicitly states that no bankruptcy information is required to be disclosed in Item 4 of its Franchise Disclosure Document.
Agreement Terms
Initial Term
5 years
Renewal Term
5 years
Renewal Conditions
To renew their Phở Hòa® franchise, franchisees must be in good standing under their current Franchise Agreement and provide timely notice of their intent to renew. They are required to update their restaurant to meet the then-current décor and design standards of Phở Hòa®, satisfy any current training requirements for renewing franchisees, sign a general release of claims against the franchisor, pay a renewal fee, and sign the franchisor's then-current Franchise Agreement along with a Renewal Amendment. The new agreement may have different or higher fees and terms than the expiring agreement.
Training & Support Program
Franchisor Assistance
Before a Phở Hòa® restaurant opens, the franchisor provides a comprehensive manual, specifications for design, appearance, equipment, and leasehold improvements, and site selection criteria. The franchisor may also visit proposed sites for evaluation and provides a 'Basic Training' program, which includes Management Training and Opening Training. Additionally, Phở Hòa® sells an initial inventory of proprietary products like broth mix and logo items. During operation, Phở Hòa® offers regular consultation and advice, designates mandatory products, fulfills orders for proprietary items, and may offer continuing training classes (with limitations on mandatory attendance and fees). The franchisor also conducts periodic inspections, reviews local advertising, updates the manual, supervises a dual-brand gift card program, and provides advice for grand opening advertising. Franchisees are required to use specific computer systems, including Slack for communication and Toast POS for operations, with fees sometimes collected by the franchisor and passed through to vendors.
Initial Training Hours
152
Training Location
Franchisor headquarters and San Jose, California or Sacramento, California
Ongoing Support
After opening, Phở Hòa® franchisees receive ongoing assistance through regular consultation and advice in response to inquiries about administrative and operational issues. The franchisor may periodically designate new or additional proprietary and non-proprietary products that franchisees must stock and promote, and fills orders for proprietary products. Phở Hòa® also offers continuing training programs, which may be mandatory for up to two individuals for a maximum of three days every 24 months without tuition fees. The franchisor conducts periodic inspections of restaurant operations and records to ensure compliance with the Franchise Agreement and Manual. Phở Hòa® also reviews any advertising materials created by franchisees for local use, revises the operations manual with updates, and supervises a dual-brand gift card program.
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
Supervisory
Territory Type
Limited
Territory Size Requirements
Phở Hòa®'s territory size depends on the location. If a Phở Hòa® restaurant is located within a Metropolitan Urban Core Area (defined by the U.S. Office of Management and Budget as having a high concentration of residents or daytime workers, like downtown San Francisco), no exclusive territory is assigned, meaning franchisees may face competition from other Phở Hòa® outlets or alternative distribution channels. For restaurants outside these Metropolitan Urban Core Areas, Phở Hòa® assigns an exclusive territory measuring approximately a 3-mile radius from the front door of the restaurant. These boundaries are defined by the closest roads or other geographic or political markers.
Staffing Notes
Phở Hòa® restaurants are required to have a sufficient number of competent employees who receive appropriate training and conform to company standards for appearance and uniforms. At all times, the restaurant must be under the direct, personal supervision of one or more Certified Managers. The franchisor recommends that franchisees employ at least two management-level supervisors who qualify as Certified Managers to ensure continuous operational oversight, especially given potential personnel turnover. Employees whose duties involve customer service must have sufficient English literacy and fluency. The management training curriculum also covers the organization of key personnel, including assistant managers, kitchen supervisors, cooks, servers, beverage helpers, cashiers, and cleaners.