D74/100FDD 2023
Alamo Drafthouse Cinemas — Litigation & Risk
Food & Beverage - Full Service · FDD Items 3, 4 & 5
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
74 / 100
FranchiseVerdict composite
Rating
CAUTION
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
1
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$2.5M
Avg loan size
$2.5M
Participating lenders
1
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 74/100 rating
Risk Score Breakdown
- 01HIGHGoing Concern status indicates financial distress at corporate level and raises sustainability questions
- 02MINORNo average revenue or net income disclosure prevents realistic ROI analysis and benchmarking
- 03MINOROnly 38 units with unknown growth trajectory suggests stagnation or contraction in franchise system
- 04MINORHigh capital requirement ($5M–$16M) combined with no financial performance data creates extreme uncertainty
- 05MINOR5% royalty on gross (not net) sales means fees are owed regardless of profitability
- 06HIGHNo disclosed litigation history raises questions about transparency; prior Alamo Drafthouse bankruptcies (2020, 2022) suggest operational/financial vulnerability
- 07MINOR10-year term locks franchisees into relationship with financially unstable franchisor
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.