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A48/100FDD 2022

DQ Grill & Chill — Litigation & Risk

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

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Elevated Risk

14 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
14
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
48 / 100
FranchiseVerdict composite
Rating
STRONG
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
1,750
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
Required
Disputes resolved outside court — limits your legal options
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
Minnesota
State whose law governs disputes — relevant if you're not based there

What drove the 48/100 rating

Risk Score Breakdown

  1. 01MEDNet income not disclosed in FDD Item 19 — cannot assess actual profitability against $1.46M-$2.43M investment
  2. 02MINORMinimal unit growth (1.3% YoY) suggests market saturation or franchisee dissatisfaction in 1,954-unit system
  3. 03MINORNo protected territory exposes franchisees to direct brand competition and encroachment risk
  4. 04HIGHMultiple active litigation cases involving encroachment claims, territorial disputes, and termination enforcement indicate systemic franchisor-franchisee conflicts
  5. 05HIGHSubcontractor payment disputes in litigation suggest operational/financial stress among existing franchisees
  6. 06HIGHGoing Concern status is FALSE — requires clarification on franchisor's financial stability and support infrastructure

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.