B60/100FDD 2024
Expense Reduction Analysts — Litigation & Risk
Business Services - Other · FDD Items 3, 4 & 5
Moderate — Review
3 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
3
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
33.3%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$1.1M
Avg loan size
$118K
Participating lenders
4
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
Texas
State whose law governs disputes — relevant if you're not based there
What drove the 60/100 rating
Risk Score Breakdown
- 01MEDNo Item 19 (Average Net Income) disclosed — cannot verify profitability claims against $76k-$106k investment
- 02MEDSlow unit growth of 5.9% YoY with only 146 units suggests limited scalability or market saturation
- 03MINORUnprotected territory creates direct competition risk from other franchisees and company-owned locations
- 04MINORHigh royalty floor ($1,000-$1,250/month minimum = $12k-$15k annually) creates break-even pressure on franchisees below $80k revenue
- 05HIGHInternational litigation history (Germany, Switzerland) raises questions about franchisor's dispute resolution practices and affiliate management
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.