Elevated Risk
6 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
6
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
58 / 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
39
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
$13.0M
Avg loan size
$334K
Participating lenders
8
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
Delaware
State whose law governs disputes — relevant if you're not based there
What drove the 58/100 rating
Risk Score Breakdown
- 01HIGHParent company (Xponential Fitness) under active securities litigation for fraud and pre-sale disclosure violations involving named executives Lindsay Junk and Anthony Geisler
- 02MEDNo average net income disclosed despite $469,629 average revenue — inability or unwillingness to show profitability is a major warning sign
- 03MEDHigh initial investment ($265K-$456K) paired with 8% royalties on gross sales creates significant break-even pressure with no disclosed path to profitability
- 04MINORRapid unit growth (35.6% YoY) in a boutique fitness category known for saturation and churn — growth rate may be unsustainable or mask underlying unit quality issues
- 05HIGHLitigation directly involves corporate officers responsible for franchise disclosures and marketing claims
- 06MINORFranchise Disclosure Document (Item 19) financial performance data not provided to analyst — prospective franchisees must obtain full FDD to verify actual unit economics
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.