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B64/100FDD 2025
D-Bat — 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
64 / 100
FranchiseVerdict composite
Rating
MODERATE
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
112
Government-backed loans issued
Default rate
12.1%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
4 loans
Loans charged off or defaulted
Total loan volume
$89.7M
Avg loan size
$801K
Participating lenders
32
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
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
Texas
State whose law governs disputes — relevant if you're not based there
What drove the 64/100 rating
Risk Score Breakdown
- 01MEDNo Item 19 (Average Unit Volume) disclosed - impossible to assess ROI or validate 40% royalty burden
- 02MINORExceptionally high royalty rate of 40% on membership fees severely limits net profitability
- 03MINORModest unit growth of 11.1% YoY suggests slowing expansion or market saturation concerns
- 04MINORHigh initial investment range ($536K-$1M+) paired with unknown revenue creates significant capital-at-risk scenario
- 05HIGHGoing Concern status is FALSE - potential financial instability at franchisor level raises sustainability questions
- 06MINORProtected territory provided but with opaque financials, territorial advantage may be insufficient to offset 40% royalty drag
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.