Elevated Risk
93 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
93
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
72 / 100
FranchiseVerdict composite
Rating
CAUTION
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
121
Government-backed loans issued
Default rate
1.1%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$188.9M
Avg loan size
$1.6M
Participating lenders
57
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
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
No
Franchisor can match any purchase offer when you try to sell
Governing law
Maryland
State whose law governs disputes — relevant if you're not based there
What drove the 72/100 rating
Risk Score Breakdown
- 01MEDShrinking unit base (-3.6% YoY) indicates systemic franchise dissatisfaction or market decline
- 02MINORNo financial performance disclosure (Item 19 absent) prevents ROI validation and suggests weak average unit economics
- 03HIGHMajor litigation including class action by ~90 franchisees alleging discriminatory practices and anti-competitive behavior raises systemic franchisor conduct concerns
- 04MINORMultiple royalty recovery lawsuits against former franchisees indicate cash flow stress and potential collection practices that may signal franchisor financial distress
- 05MINORUnprotected territory creates direct competition risk within same brand, eroding franchisee profitability
- 06MEDHigh royalty burden (5% of gross revenues) on mid-scale investment ($175K–$955K) with no disclosed average revenue creates uncertainty on net margins
- 07HIGH20-year term locks franchisees into commitment despite declining brand momentum and litigation exposure
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.