FranchiseVerdict
Club Pilates logo
A34/100FDD 2025

Club Pilates — Litigation & Risk

Health & Fitness · FDD Items 3, 4 & 5

Back to overview

Elevated Risk

14 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
14
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
34 / 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
251
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$68.5M
Avg loan size
$273K
Participating lenders
52

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
California
State whose law governs disputes — relevant if you're not based there

What drove the 34/100 rating

Risk Score Breakdown

  1. 01HIGHActive litigation involving pre-sale disclosure violations and fraudulent inducement allegations suggests potential FDD misrepresentations
  2. 02HIGHPending securities and derivative litigation against parent company raises governance and financial reporting credibility concerns
  3. 03MEDAverage net income not disclosed in FDD Item 19, preventing accurate ROI analysis on $385k-$839k investment
  4. 04MED8% royalty on $984k average revenue ($78.7k annually) combined with undisclosed operating costs creates uncertainty on actual franchisee profitability
  5. 05HIGHGoing concern status indicates parent company financial instability despite 18.5% YoY unit growth, suggesting aggressive expansion masking underlying problems

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.