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D75/100FDD 2025

Creation Coffee — Litigation & Risk

Food & Beverage - Coffee & Tea · 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
75 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

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

What drove the 75/100 rating

Risk Score Breakdown

  1. 01MINOROnly 4 existing units with unknown growth trajectory indicates minimal market validation and system maturity
  2. 02HIGHGoing Concern = False signals potential financial instability or operational viability concerns at corporate level
  3. 03MINORNo Item 19 (Average Unit Volume) disclosure prevents ROI analysis — inability or unwillingness to share revenue data is a critical red flag
  4. 04MEDHigh investment ceiling ($597,500) combined with undisclosed profitability creates significant downside risk with unclear break-even timeline
  5. 05MINOR6% royalty on unknown gross sales revenue makes financial projections impossible — royalties could be unsustainable if unit volumes are low
  6. 06MEDExtremely small franchise system (4 units) suggests limited corporate resources, support infrastructure, and brand recognition
  7. 07MINOR10-year term with $30,000 franchise fee typical for coffee, but commitment length is substantial given unproven business model

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.