B59/100FDD 2025
986 Pharmacy — Litigation & Risk
Health & Wellness - Other · FDD Items 3, 4 & 5
Moderate — Review
2 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
59 / 100
FranchiseVerdict composite
Rating
MODERATE
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
9
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$4.5M
Avg loan size
$497K
Participating lenders
1
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
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
California
State whose law governs disputes — relevant if you're not based there
What drove the 59/100 rating
Risk Score Breakdown
- 01MINORNo financial disclosure (Item 19) — average revenue and net income not provided, making ROI impossible to validate
- 02HIGHGoing Concern status is FALSE — indicates potential financial instability or regulatory concerns at corporate level
- 03MINORTwo senior directors (including likely owner/operator) had pharmacy license probation (2019-2020) — raises compliance and management credibility concerns
- 04MINORUnprotected territory — franchisees face direct competition from other 986 Pharmacy locations and independent pharmacies
- 05MEDHigh initial investment ($279K-$671K) with no disclosed profitability benchmarks to justify risk
- 06MINORRapid unit growth (56% YoY) with only 44 total units — suggests aggressive expansion without mature proven model
- 07MEDEscalating royalties ($1,650→$2,100/month, 27% increase) may compress already-undisclosed margins
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.