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B65/100FDD 2025

Casa de Corazon — Litigation & Risk

Education - Children's Programs · FDD Items 3, 4 & 5

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Moderate — Review

1 case disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
65 / 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
9
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
$12.4M
Avg loan size
$1.4M
Participating lenders
6

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

What drove the 65/100 rating

Risk Score Breakdown

  1. 01HIGHActive litigation by former franchisee alleging defamation, duress, and Franchise Act violations creates legal and reputational risk
  2. 02MINORHigh investment range ($916K-$4.2M) with only 8 units systemwide indicates unproven unit economics and scaling challenges
  3. 03MINOR33.3% YoY unit growth from extremely small base (8 units) is not statistically meaningful and suggests inconsistent franchisee recruitment
  4. 04HIGHNo Item 19 financial performance representations (Going Concern = False) prevents validation of claimed $453K average net income
  5. 05MINOR7% royalty on $2.4M average revenue extracts $168K annually; combined with overhead, franchisee profitability claims are unverifiable
  6. 06MINORLawsuit alleging settlement agreement nullification and CEO misconduct suggests potential franchisor credibility and governance issues

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.