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A50/100FDD 2024

District Taco — Litigation & Risk

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

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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
50 / 100
FranchiseVerdict composite
Rating
STRONG
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
Virginia
State whose law governs disputes — relevant if you're not based there

What drove the 50/100 rating

Risk Score Breakdown

  1. 01MEDNo Item 19 (average net income) disclosed — cannot assess actual profitability or ROI
  2. 02MEDOnly 15 units system-wide suggests early-stage franchise with unproven scalability and limited peer support network
  3. 03MEDHigh capital requirement ($733k-$1.46M) with no disclosed net income creates significant financial risk
  4. 04MINOR6% royalty on $1.93M average revenue equals ~$116k annual royalties with unknown profit margins
  5. 05MINORUnknown unit growth trajectory indicates lack of demonstrated system expansion or franchisee success replication

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.