Lower Risk
No litigation cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
49 / 100
FranchiseVerdict composite
Rating
STRONG
STRONG / MODERATE / CAUTION / AVOID
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.
Total 7(a) loans
37
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$7.5M
Avg loan size
$203K
Participating lenders
7
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Not required
You retain the right to sue in court
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
2 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
New York
State whose law governs disputes — relevant if you're not based there
What drove the 49/100 rating
Risk Score Breakdown
- 01MINORExplosive 1500% YoY unit growth (130 units) is unsustainable and suggests either aggressive recruitment, acquisition of existing chains, or inflated reporting — requires verification of organic vs. acquired growth
- 02MEDNo Item 19 (Financial Performance Representations) disclosed despite $652k average net income claim — inability to verify actual franchisee profitability and potential selection bias in reported averages
- 03MINORDual royalty structure (7% or minimum fee) creates cash flow unpredictability; minimum fee amount not specified, creating hidden cost risk
- 04HIGHGoing Concern = False is ambiguous — unclear if franchisor has financing/viability concerns that could affect support infrastructure
- 05MINORHigh investment ceiling ($430k) combined with unverified income claims creates significant downside risk if actual franchisee results differ materially from stated averages
Severity inferred from FDD text — not a regulatory or legal classification
Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.