D68/100FDD 2024
Bar Louie — Litigation & Risk
Food & Beverage - Full Service · FDD Items 3, 4 & 5
Moderate — Review
1 case disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
68 / 100
FranchiseVerdict composite
Rating
CAUTION
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
5
Government-backed loans issued
Default rate
25.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$7.6M
Avg loan size
$1.5M
Participating lenders
2
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Not required
You retain the right to sue in court
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
Texas
State whose law governs disputes — relevant if you're not based there
What drove the 68/100 rating
Risk Score Breakdown
- 01MEDUnit count declined 10% YoY (66 units), indicating system contraction and potential market saturation or operational challenges
- 02HIGHRecent litigation with Fortney family franchisees alleging breach of contract and franchise statute violations, resulting in forced location transfer to franchisor
- 03MINORNo average net income disclosure (Item 19) despite $3.09M average revenue—inability or unwillingness to provide profitability data is a major transparency red flag
- 04MINORHigh investment range ($1.06M–$3.95M) with 5% royalty creates significant capital risk and ongoing cost burden in contracting system
- 05MINORHigh initial franchise fee ($50,000) combined with declining unit count suggests franchisor may be relying on new unit sales rather than supporting existing franchisee success
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.