B59/100FDD 2026
Code Ninjas — Litigation & Risk
Education - Tutoring & Test Prep · 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
59 / 100
FranchiseVerdict composite
Rating
MODERATE
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
134
Government-backed loans issued
Default rate
15.6%
vs <3% typical · system-wide
5-yr default rate
12.5%
Defaults
12 loans
Loans charged off or defaulted
Total loan volume
$28.1M
Avg loan size
$209K
Participating lenders
49
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
Georgia
State whose law governs disputes — relevant if you're not based there
What drove the 59/100 rating
Risk Score Breakdown
- 01MINORUnit count declining (-0.4% YoY) despite 245-unit system suggests market saturation or franchisee struggles
- 02MEDNet income not disclosed in FDD Item 19 prevents accurate ROI assessment and profitability verification
- 03MINORHigh initial investment ($174k-$266k) combined with modest average revenue ($237k) yields thin margins after 8.25% royalty
- 04MINORAverage revenue of $237k against $45k franchise fee means 5.3-year payback on franchise fee alone before operating costs
- 05MINOR10-year term is relatively long for children's educational/activity franchise with evolving market competition
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.