Moderate — Review
4 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
4
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
46 / 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
78
Government-backed loans issued
Default rate
4.7%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
2 loans
Loans charged off or defaulted
Total loan volume
$24.9M
Avg loan size
$320K
Participating lenders
48
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 46/100 rating
Risk Score Breakdown
- 01MINORSlow unit growth of only 4.6% YoY indicates market maturation or contraction pressure
- 02HIGHParent company (Arby's RestauCo) involved in multiple litigation settlements (no-poaching, data breaches, disclosure omissions) suggesting systemic governance issues
- 03MEDAverage Net Income not disclosed in Item 19 prevents accurate ROI validation and suggests franchisor may be hiding unfavorable profit data
- 04MINORWide investment range ($115K–$1.8M) creates opacity about actual unit economics and comparability
- 05MINORData privacy breaches and cyberattack disclosures raise concerns about customer payment security and franchisee liability exposure
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.