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F87/100FDD 2025

California Tortilla — Litigation & Risk

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

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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
87 / 100
FranchiseVerdict composite
Rating
AVOID
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
22
Government-backed loans issued
Default rate
40.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
8 loans
Loans charged off or defaulted
Total loan volume
$7.4M
Avg loan size
$335K
Participating lenders
13

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

What drove the 87/100 rating

Risk Score Breakdown

  1. 01MEDUnit count collapsed 34.5% YoY (27 units remaining) — severe system contraction indicating franchisee failures or brand decline
  2. 02MEDNo Item 19 (financial performance representations) disclosed — cannot verify if $935K avg revenue is achievable or representative
  3. 03HIGHGoing Concern = False suggests franchisor may lack financial stability or confidence in long-term viability
  4. 04MINORThin unit margins: $128.7K net income on $935K revenue (13.8% net margin) leaves minimal buffer for underperformance
  5. 05MINORHigh initial investment ($443.7K-$836.5K) relative to average net income ($128.7K) = 3.4-6.5 year payback before accounting for debt service
  6. 06HIGHNo litigation disclosed but massive unit decline suggests systemic operational or support failures not yet formalized

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.