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A47/100FDD 2025

Erbert & Gerbert's Sandwich Shop — Litigation & Risk

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

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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
47 / 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
15
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
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
Wisconsin
State whose law governs disputes — relevant if you're not based there

What drove the 47/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 6.7% YoY (60 units) indicates system contraction and potential market saturation or franchisee dissatisfaction
  2. 02MINORNo average net income disclosure in FDD (Item 19) prevents accurate ROI validation against $39.5K-$460K investment range
  3. 03HIGHTwo litigation settlements ($50K + $77.5K) within 4 years suggest franchise relationship management issues and location/territory disputes
  4. 04MEDHigh investment ceiling ($460K) combined with undisclosed profitability creates significant downside risk for multi-unit operators
  5. 05HIGHGoing concern status 'False' is ambiguous—unclear if franchisor or franchisees face financial viability concerns
  6. 06MINOR6% royalty on $617K average revenue ($37K/year) is substantial without knowing actual net margins or whether breakeven is achievable

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.