F85/100FDD 2022
Dale Carnegie — 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
85 / 100
FranchiseVerdict composite
Rating
AVOID
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
16
Government-backed loans issued
Default rate
25.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
2 loans
Loans charged off or defaulted
Total loan volume
$4.2M
Avg loan size
$263K
Participating lenders
11
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
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
Governing law
New York
State whose law governs disputes — relevant if you're not based there
What drove the 85/100 rating
Risk Score Breakdown
- 01MINORStagnant unit growth at 0.7% YoY indicates a mature or declining system with minimal expansion momentum
- 02MEDFinancial performance metrics (avg revenue and net income) not disclosed in FDD Item 19, making ROI assessment impossible
- 03MINORTiered royalty structure up to 12% is aggressive and disproportionately punishes underperforming locations, creating cash flow pressure
- 04MED143 total units is a small franchise system with limited brand recognition and support infrastructure compared to competitors
- 05MED10-year term is unusually long for a training/services business with no disclosed unit economics or franchisee profitability data
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.