FranchiseVerdict
COOKIES BY DESIGN logo
D77/100FDD 2025

Cookies By Design — Litigation & Risk

Retail · FDD Items 3, 4 & 5

Back to overview

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
77 / 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
72
Government-backed loans issued
Default rate
14.5%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
10 loans
Loans charged off or defaulted
Total loan volume
$8.0M
Avg loan size
$111K
Participating lenders
44

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

What drove the 77/100 rating

Risk Score Breakdown

  1. 01MEDSystem contracting sharply: 11.9% unit decline YoY (37 units remaining) indicates accelerating franchisee exits and loss of confidence
  2. 02HIGHDual litigation against predecessor franchisor: IP infringement claim in Canada plus Texas class action alleging breach of contract, fraud, and FTC violations creates legal/reputational risk and potential successor liability
  3. 03MEDNo financial transparency: Neither average unit revenue nor net income disclosed in FDD Item 19, preventing ROI validation and suggesting poor unit economics
  4. 04MINORMinimum royalty floor of $500/month ($6,000 annually) creates fixed cost burden on low-volume locations, especially problematic for declining system
  5. 05HIGHGoing concern status indicates franchisor financial instability, raising questions about support, marketing, and system longevity
  6. 06MEDHigh investment range ($160K–$345K) with no disclosed AUV makes ROI timeline and breakeven analysis impossible to project

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.