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D69/100FDD 2023

Coast Hotels — Litigation & Risk

Lodging - Hotels & Motels · 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
69 / 100
FranchiseVerdict composite
Rating
CAUTION
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
1
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
$2.9M
Avg loan size
$2.9M
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
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
No
Franchisor can match any purchase offer when you try to sell
Governing law
Delaware
State whose law governs disputes — relevant if you're not based there

What drove the 69/100 rating

Risk Score Breakdown

  1. 01MINORNo Item 19 (Average Revenue/Net Income) disclosure - impossible to assess profitability or ROI
  2. 02MINOROnly 9 units system-wide indicates very small/early-stage franchise with minimal track record
  3. 03MINORWide investment range ($42.5K-$571K) suggests inconsistent unit economics or unclear cost structure
  4. 04HIGHGoing Concern status is FALSE - potential financial instability at franchisor level
  5. 05MEDNo disclosed unit growth trajectory - unable to verify system momentum or franchisee success rates
  6. 06MINOR3-5% royalty on gross sales (not net) - franchisees pay fees even during unprofitable periods

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.