Elevated Risk
28 cases disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 28
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 78 / 100
- FranchiseVerdict composite · higher is better
- Rating
- A
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 16
- Government-backed loans issued
- Charge-off rate
- N/A
- vs 16% franchise average
- 5-yr charge-off rate
- N/A
- Defaults
- 0 loans
- Loans charged off or defaulted
- Total loan volume
- $5.0M
- Avg loan size
- $315K
- Participating lenders
- 0
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
- 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
Extracted from FDD Item 3
Litigation Detail
Numerous franchisee-initiated suits (wrongful termination, breach of contract, misrepresentation, FTC Franchise Rule/state franchise-act claims) and franchisor-initiated trademark/post-termination enforcement suits; also two FTC antitrust/consent-order matters (Sunoco divestiture Consent Order and Speedway acquisition Order), with a 2025 stipulated judgment requiring a $4.5M civil penalty for a Consent Order violation.
What drove the 78/100 verdict
Risk Score Breakdown
- 01MINORDeclining unit count (-0.2% YoY) signals system contraction despite massive franchise base
- 02MINORNo average net income disclosure prevents ROI validation; only $1.79M avg revenue provided without profitability context
- 03HIGHSignificant litigation history involving wrongful termination, breach of contract, fraudulent inducement, and FTC actions suggests systemic franchisor-franchisee relationship issues
- 04MINORUnprotected territory creates direct competition risk; franchisees may cannibalize each other's sales in overlapping areas
- 05MEDVariable royalty structure tied to Gross Profit (not Net) is opaque and difficult to forecast; actual percentage rates not disclosed
- 06MEDHigh initial investment ceiling ($1.6M+) combined with undisclosed profitability creates severe ROI uncertainty
- 07MINOR15-year term is lengthy with no clear exit strategy articulated, locking franchisees into declining system
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.