FranchiseVerdict
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D72/100FDD 2026

Chai and Kathi Roll Lounge — Litigation & Risk

Food & Beverage - Full 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
72 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

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

What drove the 72/100 rating

Risk Score Breakdown

  1. 01HIGHGoing Concern status is FALSE — indicates franchisor financial distress or viability concerns
  2. 02MINOROnly 2 units in system with unknown growth trajectory — suggests minimal market validation and potential contraction risk
  3. 03MEDNo Item 19 financial disclosure (Avg Revenue/Net Income not disclosed) — impossible to validate ROI claims or unit economics
  4. 04MINORHigh initial investment range ($203.8K–$413.2K) with no corresponding revenue benchmarks — unfavorable risk-reward ratio
  5. 05MED6% royalty on undisclosed revenue base means franchisee cannot calculate true profitability or break-even timeline
  6. 06MEDExtremely limited franchisee network (2 units) creates zero peer support and raises questions about concept viability

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.