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D72/100FDD 2024

5 Star Nutrition — Litigation & Risk

Health & Wellness - Other · FDD Items 3, 4 & 5

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Moderate — Review

3 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
3
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
72 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

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
Texas
State whose law governs disputes — relevant if you're not based there

What drove the 72/100 rating

Risk Score Breakdown

  1. 01HIGHGoing concern status is FALSE, indicating potential financial instability or restructuring at corporate level
  2. 02HIGHMultiple serious litigations including TCPA class action, Prop 65 product safety violations, and federal misdemeanor plea for misbranding dietary ingredients—core product integrity issues
  3. 03MEDNo disclosed average revenue or net income (Item 19) prevents ROI validation; combined with 56 units of unknown growth trajectory, profitability is unverifiable
  4. 04MINORHigh royalty rate (7.5%) paired with $25,000 franchise fee and required territory investment creates ongoing cost burden with unclear sales benchmarks
  5. 05HIGHFederal criminal plea agreement (USA v. Defyned Brands) for misbranding suggests regulatory compliance failures affecting the supplement/nutrition category

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.