B57/100FDD 2024
Children's Lighthouse — Litigation & Risk
Education - Children's Programs · FDD Items 3, 4 & 5
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
57 / 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
16
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
Total loan volume
$16.8M
Avg loan size
$1.1M
Participating lenders
10
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
3 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
Texas
State whose law governs disputes — relevant if you're not based there
What drove the 57/100 rating
Risk Score Breakdown
- 01MINORNo Item 19 (Net Income) disclosure despite $1.9M average revenue — inability or unwillingness to substantiate profitability is a major transparency concern
- 02MINORSlow unit growth of only 3.0% YoY with 69 locations suggests market saturation or franchisee satisfaction issues in competitive childcare sector
- 03HIGH2014 litigation alleging fraud and negligent misrepresentation settled for only $45K in 2015 — suggests either weak claims or corporate unwillingness to litigate, raises questions about sales practices
- 04MINORWide investment range ($1.07M–$8.93M) indicates highly variable unit economics and unclear cost structure; franchisee outcomes likely unpredictable
- 05MINORHigh upfront costs ($1M+) with 20-year commitment in a labor-intensive, regulation-heavy industry with thin margins and high staff turnover risk
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.