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D70/100FDD 2026

Dairy Queen — Litigation & Risk

Food & Beverage - Quick Service · FDD Items 3, 4 & 5

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Elevated Risk

12 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
12
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
70 / 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
1,025
Government-backed loans issued
Default rate
10.7%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
109 loans
Loans charged off or defaulted
Total loan volume
$317.7M
Avg loan size
$310K
Participating lenders
272

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
1 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

What drove the 70/100 rating

Risk Score Breakdown

  1. 01MINORStagnant unit growth of only 1.4% YoY indicates system contraction and poor franchisee recruitment/retention
  2. 02MINORNo Item 19 (Average Net Income) disclosure prevents validation of $1.62M average revenue translating to actual profitability
  3. 03HIGHMultiple litigation categories (contract disputes, trademark infringement, encroachment claims) suggest franchisor credibility and operational governance issues
  4. 04MINORUnprotected territory creates direct competition risk and commoditizes franchisee investments within the same market
  5. 05MINORHigh investment range ($623K-$2.78M) combined with 4-5% royalties on gross sales offers poor downside protection if revenues underperform
  6. 06HIGHOfficer litigation history from previous franchise employment raises governance and compliance risk concerns

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.