B60/100FDD 2024
Club Cat — Litigation & Risk
Lodging - Hotels & Motels · 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
60 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID
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 60/100 rating
Risk Score Breakdown
- 01MINORSingle operating unit with unknown growth trajectory limits system validation and suggests early-stage or stalled expansion
- 02MEDNo Item 19 financial performance representation disclosed — cannot independently verify the $385,216 average revenue claim
- 03MEDHigh initial investment ($302k–$439k) relative to single-unit sample creates concentration risk with limited comparable data
- 04MED6% royalty on gross revenue (not net) is standard but punitive if revenue doesn't convert to profit; net margins appear ~35% leaving limited cushion
- 05MINOR10-year term lock-in is lengthy given franchise system maturity uncertainty and single-unit operating history
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.