BAbove average56/100FDD 2022
Dale Carnegie: Litigation & Risk
Education · 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)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 56 / 100
- FranchiseVerdict composite · higher is better
- Rating
- B
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 24
- Government-backed loans issued
- Charge-off rate
- 15.4%
- vs 16% franchise average
- 5-yr charge-off rate
- 25.0%
- Defaults
- 2 loans
- Loans charged off or defaulted
- Total loan volume
- $6.4M
- Avg loan size
- $266K
- Participating lenders
- 14
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
- NY
- State whose law governs disputes. Relevant if you're not based there
What drove the 56/100 verdict
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.