D68/100FDD 2025
Crestcom — 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
68 / 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
21
Government-backed loans issued
Default rate
27.3%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
3 loans
Loans charged off or defaulted
Total loan volume
$2.9M
Avg loan size
$137K
Participating lenders
5
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
2.5 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
Colorado
State whose law governs disputes — relevant if you're not based there
What drove the 68/100 rating
Risk Score Breakdown
- 01MEDNo average net income disclosed in Item 19 — unable to assess actual profitability or ROI despite $1.11M avg revenue
- 02MINORModest unit growth of 8.0% YoY with only 27 total units suggests slow system expansion and potential market saturation concerns
- 03MEDHigh royalty rate of 9.75% combined with undisclosed net income creates uncertainty about franchisee take-home earnings
- 04MINORWide investment range ($231K-$512K, 122% variance) indicates inconsistent territory costs and unclear capital requirements
- 05MINORZero franchise fee unusual for $231K+ investment — may indicate weak demand, system maturity issues, or hidden ongoing costs
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.