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D75/100FDD 2024

Co/LAB Lending — Litigation & Risk

Real Estate · FDD Items 3, 4 & 5

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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
75 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

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
1 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
Pennsylvania
State whose law governs disputes — relevant if you're not based there

What drove the 75/100 rating

Risk Score Breakdown

  1. 01HIGHGoing concern warning indicates franchisor financial distress or viability questions
  2. 02MINOROnly 1 existing unit suggests brand is pre-revenue or collapsing; impossible to validate business model
  3. 03MEDNo average revenue or net income disclosed (Item 19) prevents ROI analysis and suggests poor unit performance
  4. 04MINORUnprotected territory creates direct competition risk and cannibalization within franchise system
  5. 05MINORHigh franchise fee ($30,000) relative to total investment ($54,750–$114,100) leaves minimal working capital
  6. 06MINOR7-year term is long commitment to unproven concept with single operating unit
  7. 07MED6% royalty on non-disclosed revenue creates ongoing obligation with unknown profitability ceiling

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.