There should've been two handicap systems for Group Mode.
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Power Handicap: The higher the number (ranges from 1-9), the stronger the player, and the better his launch resistance is against opposing players and environmental hazards.
If two players with the same power handicap attack each other, there is no change between their power and launch resistance.
If player 1's handicap is 9, while player 2's handicap is 1, there's a drastic difference between their strength. If player 2 attacks player 1, player 1 will hardly flinch even at 100% damage. However, if player 1 attacks player 2, player 2 will be sent flying very easily, and can even get KO'd before reaching 50% damage.
On a side note, a handicap 9 can handle environmental hazards better than handicap 1s.
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Damage Handicap: Adjust the player's damage meter. Player will always start with that amount of damage (ranges from 0%-300%).
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Special Brawl could've also been more unique by giving each player the status that they actually want. For example, player 1 is giant only, player 2 is metal only, and player 3 is always wearing the Franklin Badge and only that item.