Moderate — Review
1 case disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
60 / 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
16
Government-backed loans issued
Default rate
9.1%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$1.7M
Avg loan size
$108K
Participating lenders
13
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
North Carolina
State whose law governs disputes — relevant if you're not based there
What drove the 60/100 rating
Risk Score Breakdown
- 01MEDUnit count declined 7.3% YoY (115 units), indicating system contraction and potential market saturation or franchisee dissatisfaction
- 02MEDNo Item 19 (Average Net Income) disclosed — inability to verify profitability claims; average revenue of $127,875 may not support stated investment range of $134,312-$229,708
- 03HIGHLitigation history: Assurance of Discontinuance with Washington AG regarding illegal non-compete provisions suggests franchisor compliance issues and potential governance concerns
- 04MEDRoyalty structure floor of $500/month ($6,000 annually) is aggressive given average revenue; at lower end, this represents 4.7% effective royalty on disclosed average
- 05MINORHigh franchise fee ($35,000) relative to initial unit economics — fee represents 26-38% of total investment but profitability unclear
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.