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F84/100FDD 2025

Blimpie — Litigation & Risk

Food & Beverage - Full Service · FDD Items 3, 4 & 5

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Elevated Risk

20 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
20
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
84 / 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
524
Government-backed loans issued
Default rate
30.7%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
160 loans
Loans charged off or defaulted
Total loan volume
$70.2M
Avg loan size
$134K
Participating lenders
162

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 84/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-6.7% YoY with only 101 locations) suggests system contraction and weak franchisee retention
  2. 02MEDNo average revenue or net income disclosure (missing Item 19) prevents financial viability assessment and indicates potential franchisor concern
  3. 03HIGHMultiple active litigation cases involving breach of contract, misrepresentation, and FIPA violations across MTY USA portfolio suggest systemic compliance and integrity issues
  4. 04MINORHigh royalty burden with $300/week minimum ($15,600 annually) plus 6% of gross sales creates significant fixed costs on declining brand
  5. 05MINORUnprotected territory means franchisees face direct competition from other Blimpie franchisees with no geographic exclusivity
  6. 06HIGHGoing concern is FALSE, indicating the franchisor may have disclosed material uncertainty about business continuity
  7. 07MINORWide investment range ($89,780–$588,750) suggests inconsistent buildout costs and unclear capital requirements
  8. 08MINOR10-year term is lengthy given system's deterioration trajectory and lack of performance transparency

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.