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F79/100FDD 2023
Barrio Queen — Litigation & Risk
Food & Beverage - Full Service · FDD Items 3, 4 & 5
Elevated Risk
9 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
9
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
79 / 100
FranchiseVerdict composite
Rating
AVOID
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
6
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
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
Arizona
State whose law governs disputes — relevant if you're not based there
What drove the 79/100 rating
Risk Score Breakdown
- 01MINOROnly 7 units with unknown/stagnant growth trajectory suggests system contraction or failed expansion
- 02MINORMultiple regulatory violations and consent orders from Maryland, Virginia, and New York indicate systemic disclosure/compliance failures
- 03HIGHGoing concern status is FALSE — franchisor may face operational viability issues
- 04HIGHLitigation history includes FIPA violations and misrepresentation by predecessor entities, creating legal/reputational liability
- 05MINORNo net income disclosure (Item 19) prevents ROI validation despite $1.3M–$5.5M investment range
- 06MINORUnprotected territory creates direct competition risk from other Barrio Queen franchisees or franchisor's own locations
- 07MINORHigh royalty structure (5% + $10/week surcharge) on $4.77M average revenue = ~$250K annual franchisor fees with unclear profitability at unit level
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.