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D72/100FDD 2024

Avari Beauty — Litigation & Risk

Personal Services - Beauty & Salon · FDD Items 3, 4 & 5

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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
72 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

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

What drove the 72/100 rating

Risk Score Breakdown

  1. 01MINOROnly 1 franchised unit in system indicates minimal market validation and extreme growth uncertainty
  2. 02MINORNo average revenue or net income disclosure (Item 19) prevents realistic ROI modeling on $120,700-$190,000 investment
  3. 03HIGHGoing Concern status is FALSE, suggesting potential financial instability or inability to support franchisee network
  4. 04MINORHigh initial investment ($120,700-$190,000) combined with 6% royalty burden requires significant sales velocity to break even
  5. 05MEDExtremely limited comparable units for due diligence — only 1 franchise makes peer validation impossible
  6. 06MINORProtected territory alone cannot offset absence of performance data and single-unit system track record

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.