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A40/100FDD 2025

Arthur Murray Dance Studio — Litigation & Risk

Other · FDD Items 3, 4 & 5

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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
40 / 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
17
Government-backed loans issued
Default rate
5.9%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$2.2M
Avg loan size
$128K
Participating lenders
14

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

What drove the 40/100 rating

Risk Score Breakdown

  1. 01MINOR1980 FTC Consent Decree still active — indicates ongoing regulatory scrutiny for unfair/deceptive practices in sales and contracts
  2. 02MEDNo Item 19 (Average Net Income) disclosed — cannot verify profitability claims; $715K avg revenue without net income transparency is concerning
  3. 03MEDDeclining unit count (237 units, only 3.0% YoY growth) — suggests market saturation, franchisee struggles, or brand decline
  4. 04MINORRecent 2024 arbitration filing against Honolulu franchisee for unpaid royalties — signals enforcement issues and potential franchisee financial distress
  5. 05MINORHigh royalty burden (5-10% of weekly gross) on dance studio margins — may compress profitability significantly
  6. 06MED5-year term with no disclosed renewal rates or franchise failure data — unclear exit strategy for underperforming locations

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.