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B55/100FDD 2025

Building Kidz School — Litigation & Risk

Education - Children's Programs · FDD Items 3, 4 & 5

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Moderate — Review

5 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
5
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
55 / 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
13
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
$11.4M
Avg loan size
$880K
Participating lenders
7

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
Not waived
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
California
State whose law governs disputes — relevant if you're not based there

What drove the 55/100 rating

Risk Score Breakdown

  1. 01MINORStagnant unit growth of only 2.6% YoY with 48 total units suggests market saturation or system-wide challenges
  2. 02MINORFour separate arbitration actions in FY2024 for royalty collection indicate widespread franchisee financial distress and franchisor-franchisee conflict
  3. 03HIGHGoing concern status is False, indicating potential financial instability at corporate level
  4. 04MINORNo protected territory creates direct competition risk between franchisees and cannibalization concerns
  5. 05HIGHHigh investment range ($309.5K-$1.54M) combined with stagnant growth and litigation raises ROI sustainability questions
  6. 06MINORRoyalty structure of 7% or $500/month minimum means thin-margin locations still owe $6K annually regardless of profitability

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.