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B63/100FDD 2024

Eye Level — Litigation & Risk

Education - Tutoring & Test Prep · FDD Items 3, 4 & 5

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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
63 / 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
6
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
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
New Jersey
State whose law governs disputes — relevant if you're not based there

What drove the 63/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 2.5% YoY (117 total units) signals system contraction and potential market saturation
  2. 02MINORNo Item 19 financial performance disclosure — unable to validate ROI claims or average unit economics
  3. 03HIGHMultiple state litigation actions (Washington 2016, Maryland 1996 & 2018) for franchise registration violations indicate compliance issues and franchisor credibility concerns
  4. 04MINORUnprotected territory creates direct competition risk between franchisees within same geography
  5. 05MINORPer-student royalty model ($36-$32) creates variable revenue risk dependent on enrollment volatility
  6. 06MINORLow franchise fee ($5,000) paired with declining units suggests weak franchisor support or declining demand
  7. 07HIGHGoing Concern notation indicates potential financial instability at corporate level

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.