Elevated Risk
14 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
14
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
23
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
California
State whose law governs disputes — relevant if you're not based there
What drove the 68/100 rating
Risk Score Breakdown
- 01HIGHGoing concern status is FALSE — indicates potential financial instability or restructuring at parent company level
- 02HIGHActive litigation across multiple jurisdictions with specific allegations of fraudulent inducement and disclosure violations — suggests systemic franchisor credibility issues
- 03MINORTwo regulatory consent orders (CA and WA) demonstrate state-level enforcement actions for violations
- 04MINORPending securities class actions and shareholder derivative suits against parent company (Xponential Fitness) create uncertainty about franchisor's financial viability and management integrity
- 05MINORNo Item 19 (Average Unit Volume) disclosure despite $509K-$1.2M investment range — inability or unwillingness to substantiate average franchisee earnings
- 06MINOR53.1% YoY unit growth appears strong but occurs within shrinking or restructuring parent company — growth may be artificial or unsustainable
- 07MEDHigh royalty burden (7%) combined with undisclosed net income and only $360K average revenue creates profitability uncertainty
- 08MINOR10-year term locks franchisees into commitment during period of parent company legal and financial distress
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.