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Elevated Risk
25 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
25
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
65 / 100
FranchiseVerdict composite
Rating
MODERATE
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
418
Government-backed loans issued
Default rate
8.8%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
34 loans
Loans charged off or defaulted
Total loan volume
$710.6M
Avg loan size
$1.7M
Participating lenders
147
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
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
No
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 65/100 rating
Risk Score Breakdown
- 01MINORDeclining unit count of -1.1% YoY indicates shrinking system despite 1,748 locations
- 02HIGHMultiple active litigation cases across 4+ states challenging franchise classification and membership structure suggests regulatory and structural vulnerability
- 03MINORFranchisor initiated numerous collection actions for unpaid fees during last fiscal year, signaling cash flow stress among franchisees and potential systemic profitability issues
- 04MEDWide investment range ($581K-$32.5M) with no disclosed average revenue or net income makes ROI analysis impossible and suggests inconsistent unit performance
- 05MINORRoyalty structure tied to 'Property Room Revenue' is non-standard and unclear, creating potential disputes over revenue calculation and fee obligations
- 06HIGHHigh franchise fee ($45,000) combined with declining units and litigation creates unfavorable risk-reward profile
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.