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D69/100FDD 2023

DCAP Insurance / The Tax Zone — Litigation & Risk

Business Services - Tax & Financial · FDD Items 3, 4 & 5

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Moderate — Review

1 case disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
69 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

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
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
New York
State whose law governs disputes — relevant if you're not based there

What drove the 69/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-2.9% YoY with only 36 units suggests a shrinking, unstable system)
  2. 02MEDNo Item 19 financial disclosure (average revenue and net income not disclosed—impossible to assess profitability)
  3. 03MINORAggressive royalty structure (20% of gross sales for Tax Zone is among the highest in tax/accounting franchises)
  4. 04HIGHLitigation history involving founders (2012 lawsuit settled for $3,000 suggests disputes at ownership level)
  5. 05HIGH'Going Concern' status is FALSE, indicating potential financial instability at franchisor level
  6. 06MEDHigh initial investment range ($17.7K–$109.9K) paired with undisclosed ROI creates blind investment risk
  7. 07MINORDual-brand model (DCAP + Tax Zone) adds operational complexity without proven synergy 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.