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D68/100FDD 2026

Bonchon — Litigation & Risk

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

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Moderate — Review

2 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
2
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
30
Government-backed loans issued
Default rate
28.6%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
2 loans
Loans charged off or defaulted
Total loan volume
$19.8M
Avg loan size
$659K
Participating lenders
20

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

What drove the 68/100 rating

Risk Score Breakdown

  1. 01MEDNet income not disclosed in FDD Item 19 — inability to verify profitability claims against $1.6M average revenue
  2. 02MINORSlow unit growth of 3.5% YoY suggests market saturation or franchisee dissatisfaction in mature 151-unit system
  3. 03HIGHLitigation history including trademark/contract disputes and 2020 Washington consent order for unqualified accountants raises franchisor operational/compliance concerns
  4. 04MINORWide investment range ($262K-$1.3M) with no clear breakdown suggests inconsistent unit economics or hidden costs
  5. 05MINOR5% royalty on gross revenues (not net) compounds profitability pressure if margins are thin

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.