B63/100FDD 2025
Donatos Pizza — Litigation & Risk
Food & Beverage - Pizza · FDD Items 3, 4 & 5
Moderate — Review
2 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
63 / 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
34
Government-backed loans issued
Default rate
11.1%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
3 loans
Loans charged off or defaulted
Total loan volume
$13.6M
Avg loan size
$401K
Participating lenders
16
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
3 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
Ohio
State whose law governs disputes — relevant if you're not based there
What drove the 63/100 rating
Risk Score Breakdown
- 01MINORDeclining unit count (-1.6% YoY) suggests system contraction and potential franchisee struggles
- 02MEDNo disclosed net income data prevents accurate ROI assessment despite $541K-$1M investment requirement
- 03HIGHMaterial litigation history (2014-2020) involving current Donatos officers raises governance and disclosure concerns
- 04MINORHigh investment-to-revenue ratio ($541K-$1M capex vs. $1.2M avg revenue) creates thin margin for error
- 05MINORAbsence of Item 19 financial performance representation limits franchisee ability to validate earnings claims
- 06MED10-year term with 4% royalty may not provide sufficient break-even runway given unit decline trajectory
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.