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D72/100FDD 2026

Children’s Orchard — Litigation & Risk

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

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Moderate — Review

2 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
2
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

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
Required
Disputes resolved outside court — limits your legal options
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 72/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count: 13 units with -13.3% YoY contraction indicates system is shrinking, not growing
  2. 02HIGHTwo litigation settlements totaling $1.05M within recent history suggest systemic issues with contract enforcement and financial transparency
  3. 03MINORNo average net income disclosure despite $418,805 average revenue—inability or unwillingness to provide profitability data is a major transparency red flag
  4. 04MINORHigh initial investment ($226,700-$335,500) with only 4% royalty structure may indicate franchisor relies on upfront fees rather than franchisee success
  5. 05MED13-unit system is extremely small and vulnerable; franchisees have minimal peer support network and franchisor has limited resources
  6. 06MINOR10-year term locks franchisees into relationship with shrinking brand with no demonstrated path to profitability

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.