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B60/100FDD 2025

Estrella Insurance — Litigation & Risk

Business Services - Tax & Financial · FDD Items 3, 4 & 5

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Moderate — Review

1 case disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
60 / 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
9
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$2.8M
Avg loan size
$315K
Participating lenders
7

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
Florida
State whose law governs disputes — relevant if you're not based there

What drove the 60/100 rating

Risk Score Breakdown

  1. 01HIGHActive class action litigation from January 2025 cybersecurity breach creates brand/customer trust risk and potential franchisor liability exposure
  2. 02MEDNo disclosed average revenue or net income (Item 19) prevents realistic ROI assessment; unable to validate the $12,250–$84,000 investment range generates adequate returns
  3. 03MINORSlow unit growth (6.8% YoY on 219 units = ~15 net new franchises) suggests market saturation, franchisee retention issues, or weak recruitment momentum
  4. 04MEDHigh royalty rate (10–14% of commissions) combined with undisclosed profitability creates cash flow uncertainty, especially for lower-volume locations
  5. 05MINORCybersecurity incident in a financial services brand (insurance) is reputationally damaging and may trigger regulatory scrutiny or customer churn

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.