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A49/100FDD 2025

Art of Drawers — Litigation & Risk

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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
49 / 100
FranchiseVerdict composite
Rating
STRONG
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
4
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$952K
Avg loan size
$238K
Participating lenders
2

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
Georgia
State whose law governs disputes — relevant if you're not based there

What drove the 49/100 rating

Risk Score Breakdown

  1. 01HIGHGoing Concern status = FALSE indicates franchisor financial distress or operational instability
  2. 02MEDNet Income not disclosed in Item 19 — impossible to validate actual profitability claims; $819,593 avg revenue could mask significant losses
  3. 03MINORUnit count stagnant at 45 with unknown growth trajectory — suggests mature/declining system with no expansion momentum
  4. 04MINOR7% royalty on gross sales (not net) — franchisee pays regardless of profitability; combined with $60k upfront fee creates high fixed-cost burden
  5. 05MEDHigh initial investment ($132k-$159k) relative to disclosed average revenue leaves minimal margin for error in first 1-2 years

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.