FranchiseVerdict
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D69/100FDD 2023

Chili’s Grill & Bar — Litigation & Risk

Food & Beverage - Full Service · FDD Items 3, 4 & 5

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Moderate — Review

4 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
4
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
69 / 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
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
Texas
State whose law governs disputes — relevant if you're not based there

What drove the 69/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-1.0% YoY) suggests system contraction and potential market saturation or operational challenges
  2. 02HIGHMajor data breach litigation ('In re: Brinker Data Incident Litigation') with four consolidated class actions creates reputational and financial liability exposure for franchisees
  3. 03MEDNo average revenue or net income disclosure (Item 19 missing) prevents prospective franchisees from validating ROI assumptions on $1.8M–$6.5M investment
  4. 04HIGHHigh investment range ($1.8M–$6.5M) with low franchise fee ($60K) suggests capital-intensive operations and thin margins relative to system-wide litigation risk
  5. 05MINORUnprotected territory exposes franchisees to direct multi-unit competition and encroachment by corporate or other franchisees
  6. 06MINOR20-year term locks franchisees into long commitment during period of brand contraction and data breach fallout

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.