A48/100FDD 2025
El Pollo Loco — Litigation & Risk
Food & Beverage - Full Service · FDD Items 3, 4 & 5
Elevated Risk
6 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
6
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
43
Government-backed loans issued
Default rate
2.6%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$25.0M
Avg loan size
$581K
Participating lenders
19
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Not required
You retain the right to sue in court
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
California
State whose law governs disputes — relevant if you're not based there
What drove the 48/100 rating
Risk Score Breakdown
- 01MEDStagnant unit growth (0.6% YoY) indicates system maturity or decline, not expansion opportunity
- 02MEDNo disclosed average net income despite $2.2M average revenue raises profitability concerns and suggests Item 19 earnings claims are withheld for a reason
- 03HIGHExtensive multi-front litigation including shareholder derivative actions alleging breach of fiduciary duty, securities fraud, labor law violations, and territorial disputes signals governance and operational problems
- 04HIGHFalse Going Concern status indicates the franchisor has serious financial or operational viability questions
- 05MEDHigh initial investment range ($793K-$2.7M) combined with undisclosed profitability and stagnant growth creates unfavorable risk-reward ratio
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.