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D72/100FDD 2024

Baja Smoothies — Litigation & Risk

Food & Beverage - Full Service · 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 2 existing units indicates an extremely underdeveloped franchise system with no meaningful track record or network support
  2. 02MINORNo average revenue or net income disclosure (Item 19) prevents ROI validation; unable to assess if $144K-$326K investment can generate acceptable returns
  3. 03HIGHGoing Concern status is False, suggesting potential financial instability or operational risk at franchisor level
  4. 04MINORHigh initial investment ($144K-$326K) combined with low royalty fees ($2,995-$3,995 annually) indicates franchisor may be underfunded to support franchisees adequately
  5. 05MEDCart-based model is inherently location-dependent and weather-vulnerable with limited scalability or revenue diversification
  6. 06MINOR10-year term is unusually long without demonstrated franchisee success metrics or exit data
  7. 07MINORTiny unit count (2) suggests either brand is pre-revenue stage or prior franchisees have exited—both are severe red flags

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.