D69/100FDD 2023
Beerhead Bar & Eatery — 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
69 / 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
3
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$1.7M
Avg loan size
$553K
Participating lenders
3
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
Florida
State whose law governs disputes — relevant if you're not based there
What drove the 69/100 rating
Risk Score Breakdown
- 01MINORDirector of Business Relations convicted of federal tax evasion conspiracy (2005) — raises governance and compliance concerns
- 02MEDNo Item 19 financial disclosure (Avg Revenue and Net Income not disclosed) — cannot validate unit economics or ROI claims
- 03MEDSlow unit growth (12.5% YoY on only 9 units) — suggests limited franchisee demand or satisfaction
- 04MEDHigh initial investment range ($746K-$1.56M) with no disclosed average profitability — creates significant downside risk
- 05MINOR6% royalty on gross sales (not net) — incentivizes franchisor over franchisee profitability
- 06MINORBar/restaurant category has historically high failure rates — requires strong execution and local market fit
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.