Amorino: Litigation & Risk
Quick-Service Restaurants · FDD Items 3, 4 & 5
Moderate: Review
1 case disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 1
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 46 / 100
- FranchiseVerdict composite · higher is better
- Rating
- C
- 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
- 9
- Government-backed loans issued
- Charge-off rate
- N/A
- vs 16% franchise average
- 5-yr charge-off rate
- N/A
- Defaults
- N/A
- Loans charged off or defaulted
- Total loan volume
- $3.5M
- Avg loan size
- $386K
- Participating lenders
- 6
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
- Delaware
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
One case: Capernaum Capital LLC v. Minus Zero4 F LLC et al. (USDC E.D. La., Case No. 22-5271, filed Dec 13 2022). Franchisee alleged rescission, fraud, breach of contract. Settled Feb 2023 — franchisee paid Amorino Trading $16,906.06, parties exchanged mutual releases, franchise agreement terminated.
What drove the 46/100 verdict
Risk Score Breakdown
- 01HIGHLitigation history: December 2022 lawsuit alleging fraudulent misrepresentation and breach of contract, settled with franchisee paying $16,906 and terminating agreement — suggests potential disclosure or operational issues
- 02MINORHigh investment ceiling ($980,500) combined with modest average net income ($127,849) yields concerning 7.6-year payback period at upper range, increasing financial risk exposure
- 03MEDModest unit growth (22.2% YoY) on small base (22 units) indicates early-stage franchise system with limited operating history and scale; growth rate may not be sustainable
- 04MINORNo royalty model creates unclear franchisor revenue stream and potential incentive misalignment between franchisor support and franchisee success
- 05MINORItem 19 (financial performance representation) absence prevents verification of claimed average revenue/net income figures across entire franchisee population
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.