A52/100FDD 2025
Candy Cloud — Litigation & Risk
Food & Beverage - Full 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
52 / 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
12
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
$3.9M
Avg loan size
$323K
Participating lenders
5
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
Illinois
State whose law governs disputes — relevant if you're not based there
What drove the 52/100 rating
Risk Score Breakdown
- 01MEDNet Income not disclosed in FDD Item 19 — unable to validate profitability claims or ROI timeline
- 02MINORHigh investment-to-revenue ratio: $389K-$749K initial investment vs. $71,973 average weekly revenue creates unclear payback period
- 03MINORExplosive unit growth of 140% YoY is unsustainable and suggests either aggressive recruiting or potential instability; needs validation of unit retention rates
- 04MINOR6% royalty on gross (not net) revenue is aggressive and reduces margins; at $71,973/week, this equals ~$22,491/month in royalties alone
- 05MED13-unit system is extremely small and immature; limited operational data, high failure risk, and insufficient franchisee base for validation
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.