B62/100FDD 2024
DaVi Nails / Em Lash Studio — Litigation & Risk
Personal Services - Beauty & Salon · FDD Items 3, 4 & 5
Moderate — Review
5 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
5
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
62 / 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
36
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
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
Not waived
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
Utah
State whose law governs disputes — relevant if you're not based there
What drove the 62/100 rating
Risk Score Breakdown
- 01HIGHGoing concern status is FALSE — indicates financial distress or uncertainty at franchisor level
- 02HIGHLitigation history: SEC/state regulatory actions in Virginia and California for illegal franchise sales and failure to provide required disclosures — suggests compliance failures and investor protection violations
- 03MINORStagnant unit growth: 400 units with only 0.3% YoY growth indicates a mature or declining system with minimal expansion
- 04MINORNo financial performance disclosure (Item 19): Average revenue and net income not provided — impossible to validate return on $61k-$143k investment
- 05MINORHigh franchise fee ($105,000) relative to low monthly royalties ($300-$1,000) creates unfavorable initial cost structure with unclear profitability path
- 06MINORNo territory protection: Franchisees face internal competition and risk of cannibalization within the same market
- 07MINORRoyalty range uncertainty: $700/month spread suggests inconsistent profitability or tiered systems that may disadvantage smaller operators
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.