A39/100FDD 2025
Classy Closets — Litigation & Risk
Business Services - Printing & Signs · FDD Items 3, 4 & 5
Lower Risk
No litigation cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
39 / 100
FranchiseVerdict composite
Rating
STRONG
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
$493K
Avg loan size
$246K
Participating lenders
2
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
Arizona
State whose law governs disputes — relevant if you're not based there
What drove the 39/100 rating
Risk Score Breakdown
- 01MEDNet Income not disclosed in Item 19 — cannot validate profit margins or ROI claims against $54,650–$311,500 investment range
- 02MEDSmall unit count (17 total) with modest growth (16.7% YoY = ~2.8 net new units) suggests limited brand momentum and potential saturation risk
- 03MINORHigh franchise fee ($50,000) relative to total investment floor ($54,650) leaves minimal working capital for marketing, labor, and equipment
- 04MINORBroad investment range ($54,650–$311,500, 470% spread) indicates inconsistent unit economics or geography-dependent costs not explained
- 05MINORMinimum monthly royalty ($1,000–$2,500) is substantial burden on smaller locations; at $1,000/month ($12,000/year) against $54,650 initial investment = 22% annual fixed cost pressure
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.