FranchiseVerdict
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B63/100FDD 2023

Canopy by Hilton — Litigation & Risk

Lodging - Hotels & Motels · FDD Items 3, 4 & 5

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Elevated Risk

8 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
8
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
63 / 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
2
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

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

What drove the 63/100 rating

Risk Score Breakdown

  1. 01HIGHActive pending litigation regarding guest fees and franchise termination suggests operational/contractual disputes and potential franchisor enforcement issues
  2. 02MINORNo average revenue or net income disclosure (Item 19) prevents accurate ROI assessment and profitability validation
  3. 03MEDModest unit growth of 13% YoY with only 26 total units indicates limited scale and market traction for an established Hilton brand
  4. 04MINORUnprotected territory creates direct competition risk from other Canopy franchisees in same markets
  5. 05MINORHistory of breach of contract settlements and ADA compliance consent decrees suggests systemic operational or compliance challenges
  6. 06MINOR23-year term is lengthy and limits exit flexibility if brand underperforms or franchisor relationship deteriorates

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.