B63/100FDD 2024
Clarion / Clarion Pointe — Litigation & Risk
Other · FDD Items 3, 4 & 5
Elevated Risk
62 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
62
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
63 / 100
FranchiseVerdict composite
Rating
MODERATE
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
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
No
Franchisor can match any purchase offer when you try to sell
Governing law
Maryland
State whose law governs disputes — relevant if you're not based there
What drove the 63/100 rating
Risk Score Breakdown
- 01MINORDeclining unit count (-0.6% YoY) suggests system contraction and potential franchisee exits
- 02MINOR54 active royalty recovery lawsuits by franchisor indicate widespread payment disputes and cash flow problems among franchisees
- 03MINORNo Item 19 financial performance disclosure prevents assessment of actual franchisee profitability and ROI
- 04MINORWide investment range ($298K–$2.6M) with no average revenue data creates opacity around unit economics
- 05MINORUnprotected territory exposes franchisees to direct franchisor competition and internal cannibalization
- 06HIGHHigh cumulative litigation count (62+ actions) suggests adversarial franchisor-franchisee relationship
- 07MINORMid-to-high royalty rate (5.5%) combined with no profitability disclosure is concerning
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.