Feasibility & Prospectus

Data-integrity note — read first

Public aggregators disagree on Jet's numbers because they cite different FDD years. Reported royalty spans 6–12%, franchise fee $15,000–$39,500, AUV ~$895K–$951K. Treat every Jet's figure below as a placeholder to verify against the current dated FDD (Items 5, 6, 7, 19). Never underwrite off a blog aggregate.

Part A — What a prospectus must contain

A feasibility study answers one question: given this brand, market, site, operator, and capital stack, does the deal clear the required return hurdle with acceptable risk? A prospectus is the same content repackaged to persuade a lender or equity partner.

#	Section	The question it answers
1	Executive summary	The ask, the opportunity, the projected return, the recommendation — on one page. Written last, read first.
2	Concept & brand	Is this a durable, differentiated concept? Detroit-style deep-dish, brand awareness, ticket, carry-out/delivery mix.
3	Market & site analysis	Enough of the right demand here? Trade-area & daytime population, income, growth, traffic, co-tenancy, drive time, rent/sq ft.
4	Competition	Who serves this demand and where's the gap? Direct + indirect competitors, density, the whitespace thesis.
5	FDD review	What the franchisor legally discloses — the single most important document. Items 7, 19, 20, 21 carry the most weight.
6	Unit economics & pro forma	Does one store make money? AUV → COGS → labor → occupancy → royalty/ad → opex → store EBITDA, base/up/down.
7	Capital stack & sources/uses	How is it funded and where does every dollar go? Equity vs. debt (SBA 7(a) standard), fee, reserve, pre-opening.
8	Operator plan & staffing	Who runs it and can they? Owner-operator vs. manager-run, org chart, GM comp, staffing, training/ramp.
9	Risk factors	What kills this deal? Franchisor concentration, single-unit risk, labor, food inflation, lease, cannibalization, macro.
10	Returns & exit	What does the investor earn and how is the exit achieved? Cash-on-cash, payback, IRR, resale multiple, refinance, roll-up.
11	Go / No-Go criteria	The pre-committed thresholds that make this a yes — agreed before emotion enters.

The FDD review — which Items decide it

The FDD is the franchisor's federally mandated disclosure (23 standardized Items). Read all 23; these drive the decision.

Item	Contains	Why it's decisive
5	Initial franchise fee	First hard cost; veteran/multi-unit discounts live here.
6	Ongoing fees — royalty %, ad %, tech, local-mktg minimum	Permanent margin drains. A high royalty compresses store EBITDA forever.
7	Estimated initial investment (low–high)	The total capital at risk. Anchors payback and cash-on-cash.
8	Restrictions on product/supply sources	Locked into franchisor-controlled supply (cheese, dough) & rebates? Affects real COGS.
11	Franchisor assistance, training, tech, marketing	What an operator actually gets for the royalty.
12	Territory	Critical for a first-mover. Is it protected? Can Jet's drop a 2nd store next to the operator? Governs cannibalization risk.
17	Renewal, termination, transfer, dispute resolution	The exit rights and how easily the store can be sold.
19	Financial Performance Representations	The heart of underwriting. AUV, ideally median + quartiles. If thin, build AUV from franchisee calls instead.
20	Outlet counts, turnover (3 yrs) + franchisee contact list	Franchisor-health x-ray. Net growth = healthy; rising closures = red flag. The list is validation-call gold.
21	Audited financials of the franchisor	Is the franchisor itself solvent? A distressed franchisor stops supporting the operator.

Part B — Go/No-Go framework for a Jet's in Reno

The Reno thesis, in one paragraph

The Reno–Sparks MSA is ~490K people and growing fast (Reno +10.8% pop. 2019–2024, ~2.2%/yr projected), fueled by California in-migration and the Tesla/Panasonic/Switch industrial corridor. Jet's has zero stores in Nevada. Detroit-style deep-dish is a genuine product gap, and first-mover status lets an operator lock premium sites and territory before Jet's or a competitor arrives. The thesis must survive the diligence below.

B1. Diligence questions — and where the answer comes from

#	Question	Source of the answer
1	Current-year franchise fee, royalty %, ad-fund %?	FDD Items 5 & 6 (dated) — not a blog
2	Real total build-out, low–high, for a Reno inline/endcap?	FDD Item 7 + local GC bid + landlord TI
3	Realistic AUV — median and bottom-quartile, not just average?	FDD Item 19 + franchisee calls (Item 20 list)
4	Do new stores hit AUV, and how long is the ramp to breakeven?	Franchisee calls — ask about months 1–18
5	Is the territory protected? Radius? 2nd store risk?	FDD Item 12 + franchise agreement
6	Is the franchisor growing units net, or are closures rising?	FDD Item 20 (3-yr opened vs. closed)
7	Is the franchisor financially solvent?	FDD Item 21 audited financials
8	Locked into franchisor supply/rebates inflating COGS?	FDD Item 8 + franchisee calls
9	Realistic rent, TI, term for 1,400–2,200 sq ft in-market?	Landlord / commercial broker
10	Can it be staffed? Wages, availability, turnover in Reno?	Local market + operators + NV labor dept
11	Reno-specific costs — NV license, Washoe health permits, delivery insurance?	State/county agencies + Item 7 notes
12	What does the royalty actually buy (training, tech, mktg, ops)?	FDD Item 11 + franchisee satisfaction
13	How easy to sell later, at what multiple?	FDD Item 17 + business brokers (SDE)
14	Is Jet's planning to enter Reno corporately or via another franchisee?	Franchise development team — get it in writing

B2. Unit-economics pro forma (store-level P&L)

Percentages are of net sales. Three scenarios: Downside (bottom-quartile AUV) · Base (median) · Upside (top-quartile).

Corrected from the actual 2025 FDD

Original drafts (and most online sources) assumed a ~7% royalty + 4% ad = ~11% of sales. The FDD shows Jet's charges on Acquired Inventory (purchases), not sales: 12% royalty ≈ 3.5–4% of sales and the ad fund ≈ 3–4% of sales — a combined ~7–8%. That ~3-point saving lifts base-case store EBITDA from ~11% to ~14–15%. Reno's lower (non-California) labor cost is a further tailwind not yet modeled here.

Line item	QSR benchmark	Downside	Base	Upside
Net sales (AUV)	$700K–$1.5M mature	$750K	$900K	$1.1M
Food & paper (COGS)	28–33%	32%	30%	29%
Labor (incl. taxes/benefits)	25–32%	33%	29%	26%
Occupancy (rent + CAM + tax)	6–10%	10%	8%	7%
Royalty (12% of Acquired Inventory ≈ 3.5–4% of sales)	≈3.5–4% of sales	4.5%	4%	3.5%
Advertising fund (≈10% of Acquired Inventory + regional)	≈3–4% of sales	4%	3.5%	3%
Other opex	8–14%	13%	11%	10%
Store EBITDA margin	10–20% (target ~15%)	~3–4%	~14–15%	~21%
Store EBITDA ($)	—	~$25K	~$130K	~$235K

Reading it

Corrected for the real fee structure, the base case (~$900K AUV, ~14–15% margin, ~$130K store EBITDA) is solidly workable. Jet's fee load is only ~7–8% of sales — not the ~11% a "12% royalty" implies — and that's what lifts the margin. The model still lives or dies on (a) hitting AUV and (b) holding food + labor under ~60% combined. Downside still flirts with breakeven, which is why the missing Item 19 AUV (median + bottom-quartile) is the number to chase.

B3. The investment side — capital, returns, payback

Metric	Benchmark	Reno Jet's (illustrative base)
Total build-out (Item 7)	Jet's ~$572K–$786K	Assume ~$700K all-in, Reno endcap
Equity injection	SBA wants 10–30% down	~$140K–$210K equity; rest SBA/debt
Store EBITDA / SDE	—	~$130K base (higher owner-run)
Cash-on-cash return	Healthy QSR 15–25%	Strong if $130K on ~$175K equity; ~19% even on full $700K cash
Simple payback	Pizza QSR 4–6 yrs	$700K ÷ ~$130K ≈ ~5.4 yrs on total project
Breakeven sales	Fixed ÷ (1 − variable %)	~$155K–$175K/mo — recompute with real numbers; the key sensitivity

Two payback numbers, don't confuse them: payback on total project (~7 yrs) tests the deal's absolute quality; cash-on-cash on invested equity (much faster if SBA-levered) tests the equity return. Underwrite both.

B4. Weighted Go / No-Go scorecard

Score each 1–5. Weighted score = Σ(score × weight). Pre-commit thresholds before scoring so the number, not the excitement, decides.

Criterion	Weight	Pass ≥	What "5" looks like
Projected returns	25%	4	CoC ≥ 20%, payback ≤ 5 yrs base case
Franchisor health & AUV trend	20%	3	Net unit growth, rising AUV, solvent; thin Item 19 = downgrade
Market / demographics	15%	3	Growing pop., income supports $25+ ticket, strong daytime pop.
Site quality	15%	4	Endcap, ≥25K VPD, grocery/retail anchor, rent ≤8% AUV
Competition gap	10%	3	No Jet's/Detroit-style in trade area; differentiated
Operator fit	10%	3	Hands-on operator or proven GM hired pre-open
Capital availability	5%	4	Funds committed, 6-mo working-capital reserve
TOTAL	100%	≥3.5 = GO	3.0–3.5 conditional; <3.0 = NO-GO

Decision rule

A GO requires both a weighted total ≥ 3.5 and no single must-pass criterion (returns, franchisor health, site) below its threshold. One deal-killer overrides a high average.

B5. Red flags / deal-killers

No Item 19, or an average-only Item 19 — the deal would be underwritten on hope. Demand median + bottom-quartile.
Rising closures / terminations in Item 20 — net unit shrinkage or a wave of transfers = distressed franchisees exiting.
Weak franchisor financials (Item 21) — undercapitalized, over-leveraged, or freshly PE-owned with an unproven thesis.
Royalty + ad load leaving <12% store EBITDA at expected AUV — no cushion for a soft ramp or food inflation.
No/weak territory protection (Item 12) — franchisor can cannibalize the operator; fatal for a first-mover.
Rent > 10% of realistic AUV, or a TI allowance too thin for Detroit-style buildout (heavy ovens/hoods).
Ramp risk denied — if franchisees report 18–24 month ramps but the model assumes year-1 AUV, working capital runs out.
Reno is unproven for the brand — zero local awareness means the operator pays to educate the market (a first-mover cost).
Labor can't be staffed at 27–29% in a tight, growing Reno labor market.
Financing gap — can't cover build-out + a 6-month reserve → a slow ramp becomes insolvency.

B6. The validation playbook

Pull and read the full current FDD (all 23 Items). Verify 5, 6, 7, 12, 19, 20, 21 line-by-line.
Call 8–10 existing franchisees from the Item 20 list — mix high-performers, recent openers, and any exited. Ask real AUV vs. Item 19, months to breakeven, real food/labor %, out-of-pocket vs. Item 7, support quality, "would they buy another?"
Visit 3–5 stores in person — dayparts, throughput, labor, carry-out vs. dine-in mix, product consistency, buildout condition.
Independently verify Item 19 — cross-check the FDD average against the call sample; if they diverge, trust the calls.
Commission a third-party site & demographic study for the specific Reno trade areas.
Get a local GC bid + broker rent/TI reality-check — Detroit-style ovens/hoods can push buildout above the FDD estimate.
Sensitivity-test — flex AUV ±20%, food +3, labor +3, rent to 10%. If it only works at top-quartile AUV, it's a No-Go.
Confirm territory in writing + the franchisor's Reno/NV expansion intentions in writing.
Line up SBA pre-qualification and prove a 6-month reserve on top of build-out.
Have a franchise attorney review the FDD and franchise agreement before signing.

Bottom line: how to decide

The four metrics that most determine the call: (1) real Item 19 AUV — especially median and bottom-quartile; (2) store EBITDA margin after Jet's full royalty+ad load, which must clear ~15% at expected AUV; (3) cash-on-cash and payback on the actual invested equity (target CoC ≥ 20%, payback ≤ 5 yrs); (4) territory protection.

If the base case clears the return hurdle and survives a −20% AUV sensitivity, the franchisee calls corroborate Item 19, the franchisor shows net growth + solvency, and the territory is protected → GO. If it only pencils at top-quartile AUV, or Item 19 is thin, or closures are rising, or the territory is open → NO-GO, no matter how attractive the empty-market thesis feels. Whitespace is a reason to look, not a reason to sign.