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D69/100FDD 2022
Costa Oil — Litigation & Risk
Automotive - Repair & Service · 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
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
10
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$4.0M
Avg loan size
$403K
Participating lenders
6
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
Non-compete
2 yrs
Post-termination restriction on similar businesses
Franchisor can compete
No
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 69/100 rating
Risk Score Breakdown
- 01MEDNo Item 19 (Financial Performance Representations) disclosed — cannot verify if $68,331 average net income is realistic or survivorship-biased
- 02MINOROnly 13 units system-wide with unknown growth trajectory — cannot assess market demand or expansion momentum
- 03HIGHGoing Concern status is FALSE — suggests potential financial instability at corporate level
- 04MEDHigh initial investment ($131,750–$212,900) relative to disclosed net income ($68,331) yields only 32–52% ROI annually, creating extended payback period
- 05MINORMinimum weekly royalty ($150/week = $7,800/year) creates fixed cost burden even during low-revenue periods
- 06MINORFranchise fee ($54,900) represents 41% of minimum total investment — high front-loaded cost with no revenue offset
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.