A39/100FDD 2025
California Pools — Litigation & Risk
Food & Beverage - Quick Service · FDD Items 3, 4 & 5
Lower Risk
No litigation cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
39 / 100
FranchiseVerdict composite
Rating
STRONG
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
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$395K
Avg loan size
$395K
Participating lenders
0
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
Texas
State whose law governs disputes — relevant if you're not based there
What drove the 39/100 rating
Risk Score Breakdown
- 01MEDNo Item 19 (Average Net Income) disclosed — cannot validate actual profitability against $72,940-$126,340 investment
- 02MEDOnly 24 units system-wide with unknown growth trajectory — suggests limited scale and potentially stagnant expansion
- 03HIGHGoing Concern status is FALSE — indicates potential financial instability or uncertainty about franchisor's viability
- 04MINORHigh royalty burden (4.5% of gross) on average $2.73M revenue ($122,865/year) with $45,000 upfront fee creates 6-year payback hurdle
- 05MINORWide investment range ($72,940-$126,340 variance of 73%) suggests inconsistent unit economics or undefined startup costs
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.