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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
180
Government-backed loans issued
Default rate
22.8%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
39 loans
Loans charged off or defaulted
Total loan volume
$22.3M
Avg loan size
$124K
Participating lenders
83
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
North Carolina
State whose law governs disputes — relevant if you're not based there
What drove the 87/100 rating
Risk Score Breakdown
- 01MINORSystem declining rapidly: 20.7% unit contraction YoY indicates shrinking franchise base and potential market saturation or model failure
- 02MINORNo financial disclosure: Absence of Item 19 (Average Financial Performance) makes ROI analysis impossible; cannot validate investment viability
- 03HIGHGoing Concern status False: Suggests potential financial instability or structural issues with the franchisor itself
- 04MINORUnprotected territory: Franchisees face cannibalization risk from company-owned or competing franchisee locations within their market
- 05MINORHigh minimum royalty burden: 8% or monthly minimum creates fixed overhead even during low-revenue periods; unsustainable during downturns
- 06MINOROnly 109 remaining units: Severely diminished system size limits brand recognition, supply chain leverage, and peer support network
- 07MED10-year commitment: Long lock-in period with no exit clause mentioned; risky given market decline trajectory
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.