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B65/100FDD 2025
Break Coffee Co. — Litigation & Risk
Food & Beverage - Coffee & Tea · FDD Items 3, 4 & 5
Moderate — Review
1 case disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
1
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
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
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 Jersey
State whose law governs disputes — relevant if you're not based there
What drove the 65/100 rating
Risk Score Breakdown
- 01HIGHGoing Concern status is FALSE — franchisor may face operational or financial viability issues
- 02MINOROnly 9 units with unknown growth trajectory — minimal scale and unclear system expansion
- 03HIGHActive litigation (2024) involving non-compete enforcement suggests franchisor aggressively polices agreements and potential franchisee conflicts
- 04MED12% royalty on gross sales is high relative to net margin (~44% net income suggests 56% operating costs) — leaves limited cushion
- 05MINORNo Item 19 financial performance representations — cannot independently verify claimed $151,804 avg revenue or $66,805 net income
- 06MINORHigh initial investment ($102.5K–$146K) combined with unknown unit performance creates ROI uncertainty
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.