Bottom line
- Total investment $75K – $130K including a $40K franchise fee.
- Average unit revenue of $180K/year.
- Rated CAUTION with a risk score of 70/100. SBA loan default rate of 0.0% across 2 loans (below the industry average).
- System growing at 43.8% CAGR over 3 years with 69 total units — strong expansion trajectory.
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Class 101 unit return on the cash you put in?
Unlevered ROIC · per unit
23%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Class 101 units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$288K
on $1.4M purchase
Total debt
$1.2M
SBA $0.7M + senior + seller note
Overview
About
Class 101 franchisees operate online creative education platforms (typically courses in art, design, crafts, or similar skill-based content). Day-to-day operations include course content curation, student acquisition via digital marketing, customer service, platform management, and instructor relationship coordination. Revenue is generated through student enrollment fees and subscription models.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 28 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Class 101 presents HIGH RISK due to active fraud/regulatory litigation, absent financial disclosure (Item 19), going concern issues, and aggressive royalty floor that may exceed profitability of average franchisees.
Score breakdown · what drove the 70 / 100 rating
- 01HIGHActive litigation involving fraud allegations and state regulatory violations regarding franchise registration and disclosure—indicates potential FTC/state enforcement risk and franchisor credibility issues
- 02HIGHGoing Concern status is FALSE—suggests franchisor financial instability or solvency concerns that could impact support, marketing, and system viability
- 03HIGHNet Income not disclosed in FDD Item 19—prevents prospective franchisees from validating profitability claims; combined with litigation, suggests franchisor unwilling or unable to substantiate earnings
- 04MINORRoyalty floor of $500/month ($6,000 annually) is aggressive relative to average revenue of $180,293—creates cash flow strain for underperforming locations and limits franchisee flexibility
- 05HIGHUnit growth of 23.2% YoY appears strong but context missing—unclear if growth masks franchisee churn, unit consolidation, or acquisition of competitor locations; litigation suggests potential attrition
- 06HIGHHigh initial investment ($75K-$130K) combined with undisclosed profitability and litigation creates ROI validation gap—no clear path to justify capital outlay
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
72 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Class 101 · FDD (2025) PDF