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Elevated Risk
9 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
9
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
55 / 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
12
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
Not required
You retain the right to sue in court
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
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
New York
State whose law governs disputes — relevant if you're not based there
What drove the 55/100 rating
Risk Score Breakdown
- 01MINORDeclining unit count (-0.8% YoY) signals system contraction and potential franchisee dissatisfaction
- 02HIGHMultiple active litigation streams (antitrust, breach of contract, no-poaching investigation) create legal and operational uncertainty
- 03MEDNo disclosed average revenue or net income data (absent Item 19) prevents legitimate ROI assessment and suggests franchisor may be hiding unfavorable unit economics
- 04MINORTiered royalty structure (6% to 3.75%) indicates potential performance-based penalties or variable profitability tiers that may disadvantage newer/smaller franchisees
- 05MEDReal estate brokerage model is commission-dependent and cyclical; vulnerable to market downturns and economic sensitivity
- 06HIGHAntitrust litigation specifically regarding 'broker commission rules' suggests franchisor practices may be under regulatory scrutiny and subject to forced change
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.