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D75/100FDD 2024

Extreme Art Studio — Litigation & Risk

Home Services - Painting · FDD Items 3, 4 & 5

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Lower Risk

No litigation cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
75 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

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

What drove the 75/100 rating

Risk Score Breakdown

  1. 01MINORZero existing franchisee units with unknown growth trajectory indicates brand has never successfully scaled or is in early/failed launch stage
  2. 02HIGHGoing Concern status is FALSE, suggesting franchisor financial instability or viability concerns
  3. 03MEDNo average revenue or net income disclosure (missing Item 19) prevents ROI validation and suggests poor unit economics
  4. 04MINORHigh initial investment range ($119k-$355k) paired with unproven business model creates significant financial exposure
  5. 05MINORMinimum royalty floor of $500/month ($6k annually) creates break-even pressure even in slow months
  6. 06MINOR10-year term locks franchisee into relationship with unproven franchisor with no track record

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.