Risk Score
Pending analysis
Investment Range
$2,721,000 - $4,326,000
Franchise Fee
$50,000
Total US Locations
269
Business Summary
TGI Fridays Franchisor, LLC operates and franchises full-service casual theme restaurants under the "TGI Fridays" brand. These restaurants feature a specialized menu and full bar service, with distinctive exterior and interior designs, unique décor, specialized recipes, and uniform standards for food and beverage preparation and service. The system also includes automated management information and control systems, technical assistance, and training programs.
Corporate History
TGI Fridays Franchisor, LLC was formed in Delaware on January 17, 2017. The brand's predecessor, TGI Friday's Inc., initially opened the first Fridays Restaurant under the current System in 1972 and began offering franchises in the United States in 1978. In March 2017, as part of a securitization financing transaction, TGI Friday's Inc. and its affiliates were restructured. All existing franchise agreements and related intellectual property were transferred to TGI Fridays Franchisor, LLC, which then became the franchisor. TGI Friday's Inc. now acts as a manager, providing support services to franchisees. There is a proposed transaction for UK-based Hostmore plc to acquire all membership interests in TGI Friday's Inc. in the third quarter of 2024, which would make Hostmore the parent company of TGI Fridays Franchisor, LLC.
Financial Overview
Investment Range
$2,721,000 - $4,326,000
Franchise Fee (Low)
$50,000
Franchise Fee (High)
$50,000
Royalty %
4%
Marketing %
1.5%
Equipment Costs (Low)
$2,423,500
Equipment Costs (High)
$3,591,000
Working Capital
$130,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Going concern qualification
Financial Health Notes
TGI Fridays Franchisor, LLC's financial health is impacted by its ultimate parent, TGIF Midco, Inc., which has raised substantial doubt about its ability to continue operations. TGIF Midco, Inc. has experienced historical losses, negative operating cash flow, and cash restrictions due to rapid amortization of its 2017 Series A-2 Notes. Its forecast indicates insufficient resources to meet $31.2 million in debt repayments due within 12 months from the financial statement issuance date, and it projects continued non-compliance with debt covenants, leading to cash restrictions and $17.5 million in callable debt. While TGI Fridays Franchisor, LLC plans to obtain funding from its parent, the parent's uncertain going concern status means this funding plan is not considered probable. The financial statements do not include adjustments that might result from the outcome of this uncertainty.
Financing Details
TGI Fridays Franchisor, LLC does not offer direct or indirect financing to its franchisees. TGI Fridays Franchisor, LLC also does not guarantee any franchisee notes, leases, or obligations.
Performance Metrics
Total US Locations
269
Franchised Units
129
Corporate Units
140
Avg Square Footage
6,500
Franchising Since
1978
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
TGI Fridays Franchisor, LLC has no litigation to report in Item 3 of this Franchise Disclosure Document.
Bankruptcy History
TGI Fridays Franchisor, LLC has no bankruptcy history to report in Item 4 of this Franchise Disclosure Document.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise agreement, TGI Fridays Franchisor, LLC franchisees must provide written notice between 12 and 24 months before the current term expires. They must be in good standing, without default on any agreement with TGI Fridays Franchisor, LLC or its affiliates, and meet current financial requirements. Franchisees are required to renovate and modernize their restaurant to conform to the current system image, satisfy all up-to-date training requirements, and have their site approved for the successor term. They must also maintain all necessary licenses and permits, sign a general release of claims, and execute a new franchise agreement which may include different terms, such as higher fees and advertising contributions. A successor fee must also be paid, which does not cover remodeling costs.
Training & Support Program
Franchisor Assistance
TGI Fridays Franchisor, LLC provides comprehensive support to its franchisees. Before opening, the franchisor offers site selection guidelines, on-site evaluations, review and consent of proposed sites, and architectural consultation (at the franchisee's expense). They also review construction plans, conduct a final inspection, and grant access to the Manuals which contain System Standards. Initial training includes an Owner Orientation Program, a Management Training Program for key personnel, and assistance from a New Store Opening (NSO) Team to help train employees (at the franchisee's cost). After opening, TGI Fridays Franchisor, LLC manages and spends contributions to the National and any Regional Advertising Funds, provides guidelines for local advertising, and develops promotional programs. The franchisor also establishes and maintains Digital Media (including the Fridays Websites), may modify the System (manuals, menu, equipment, décor), and offers periodic advice, consultation, and inspections. Franchisees receive a list of approved suppliers and support for mandated computer systems, gift card programs, loyalty programs, in-store music, guest internet standards, and PCI compliance.
Initial Training Hours
532
Training Location
Corporate headquarters in Dallas, Texas, and certified Center of Excellence Restaurants in the field.
Ongoing Support
After opening, TGI Fridays Franchisor, LLC provides ongoing support to its franchisees through various channels. This includes collecting and administering funds for National and Regional Advertising, establishing Regional Co-ops, and offering guidelines for local advertising and promotional programs. The franchisor maintains Digital Media platforms, including the Fridays Websites, and may introduce modifications to the overall System, such as updates to manuals, menus, equipment, and décor. Franchisees receive periodic advice and consultation, and their restaurants undergo regular inspections. TGI Fridays Franchisor, LLC also provides lists of approved suppliers, specifies computer systems, and offers IT Service and Support, including a help desk for point of sale, menu management, communications, information security, and equipment purchasing. Mandatory participation is required in loyalty programs, gift card programs, in-store music services, guest internet standards, and Payment Card Industry (PCI) Data Security Standards Compliance. The franchisor may also require additional training courses for franchisees, operating principals, and restaurant managers, and mandates attendance at annual meetings or conferences.
Franchise Requirements
Ideal Candidate Profile
TGI Fridays Franchisor, LLC emphasizes previous restaurant experience in prospective franchisees. While not requiring personal participation in development or operation, it does require that a Principal Owner serve as a full-time Operating Principal for each restaurant and a Development Principal (with substantial and adequate time commitment) for development, both of whom must be acceptable to the franchisor, own at least a 5% equity interest, maintain a primary residence within a reasonable driving distance of the restaurant or territory, and successfully complete the management training program. The franchisor also seeks franchisees who will dedicate their best efforts to the business and avoid conflicts of interest with other ventures.
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
Protected
Territory Size Requirements
Fridays Restaurants territories are defined in the Development Agreement as a specified geographic area, which is described by boundary streets, highways, counties, states, or other recognizable demarcations. A description of the territory will be attached as an exhibit to the Development Agreement. The Franchise Agreement itself does not grant any exclusive rights to use the System or the Proprietary Marks in any geographic area for Fridays Restaurants.
Staffing Notes
TGI Fridays Franchisor, LLC requires each restaurant to always have at least four Validated Managers on-site, with the Operating Principal being one of them. Any new managers must successfully complete the Management Training Program within 60 days of assuming their position. If the number of Validated Managers drops below four, the franchisee has 30 days to hire replacements and enroll them in the training program. For new store openings, a combined team of approximately 12 franchisor and franchisee managers is typically involved. Franchisees are solely responsible for hiring and managing their employees, including compensation, taxes, and work schedules, and must ensure their Validated Managers train the rest of the staff. TGI Fridays Franchisor, LLC has the right to approve the Operating Principal, Multi-Unit Manager, Project Manager, and all restaurant managers.