FranchiseVerdict
Black Sheep Coffee logo
B65/100FDD 2025

Black Sheep Coffee — Litigation & Risk

Food & Beverage - Coffee & Tea · FDD Items 3, 4 & 5

Back to overview

Lower Risk

No litigation cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
0
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
1
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$700K
Avg loan size
$700K
Participating lenders
1

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
Florida
State whose law governs disputes — relevant if you're not based there

What drove the 65/100 rating

Risk Score Breakdown

  1. 01MINOROnly 2 existing units with unknown growth trajectory suggests minimal proven scalability
  2. 02MINORNo average revenue or net income disclosure (Item 19) prevents realistic ROI assessment for $738K-$1.4M investment
  3. 03MEDHigh initial investment ($738K-$1.4M) combined with 7% royalty creates significant break-even pressure without disclosed earnings
  4. 04MINORZero territorial protection exposes franchisee to direct competition from other Black Sheep locations
  5. 05MEDUnclear how franchisor supports 2-unit system; minimal infrastructure suggests limited franchisee support resources
  6. 06MED10-year commitment with undisclosed performance metrics creates long-term lock-in risk

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.