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B65/100FDD 2024

Brown's Chicken — Litigation & Risk

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

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Moderate — Review

4 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
4
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
$153K
Avg loan size
$153K
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
1.5 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
Illinois
State whose law governs disputes — relevant if you're not based there

What drove the 65/100 rating

Risk Score Breakdown

  1. 01HIGHGoing Concern status is FALSE — indicates potential solvency or operational viability issues at franchisor level
  2. 02MEDNo Item 19 financial disclosure (Avg Revenue/Net Income not disclosed) — impossible to validate ROI claims or unit economics
  3. 03HIGHFour concluded litigations in 2016 involving breach of franchise agreements, non-payment disputes, and trademark issues — suggests systemic franchisor-franchisee conflict
  4. 04MINOROnly 21 units with unknown growth trajectory — unusually small system raises sustainability questions
  5. 05MINORWide investment range ($366K–$2.7M) with no corresponding revenue data — unclear what drives cost variance or profit potential
  6. 06MED5% royalty + undisclosed advertising fees on unknown revenue base — unable to model true cash flow burden

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.