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F79/100FDD 2025

Coffee Beanery — Litigation & Risk

Food & Beverage - Coffee & Tea · FDD Items 3, 4 & 5

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Moderate — Review

2 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
79 / 100
FranchiseVerdict composite
Rating
AVOID
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
73
Government-backed loans issued
Default rate
25.5%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
14 loans
Loans charged off or defaulted
Total loan volume
$14.5M
Avg loan size
$199K
Participating lenders
36

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

What drove the 79/100 rating

Risk Score Breakdown

  1. 01MINORNo Item 19 financial disclosure (average revenue and net income) prevents ROI validation; high investment ($143k-$417k) without transparent earnings data
  2. 02MINORStagnant unit count at 28 with unknown growth trajectory suggests mature or declining system; no expansion momentum in competitive coffee sector
  3. 03HIGHMaterial litigation history: 2007 Illinois AG investigation into unlicensed brokers and disclosure violations, plus 2006 Maryland Securities Commissioner consent order for registration and antifraud violations—indicates past compliance and sales practice failures
  4. 04MINORUnprotected territory creates direct competition risk; multiple franchisees can operate in same area, diluting individual unit economics
  5. 05HIGH4% royalty is low (suggests weak franchisor revenue model), combined with no going concern statement and financial opacity raises sustainability questions

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.