B65/100FDD 2025
Class 101 — Litigation & Risk
Business Services - Other · FDD Items 3, 4 & 5
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
65 / 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
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
Total loan volume
$25K
Avg loan size
$13K
Participating lenders
1
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
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 65/100 rating
Risk Score Breakdown
- 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 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.