![Famous Dave’s logo](https://cdn.brandfetch.io/famousdaves.com/w/128/h/128/fallback/lettermark?c=<img src="https://cdn.brandfetch.io/domain/apple.com?c=1idsvcTjLv919Ax0E2s" alt="Logo by Brandfetch" />){kind=small}
B64/100FDD 2024
Famous Dave’s — Litigation & Risk
Food & Beverage - Full Service · FDD Items 3, 4 & 5
Elevated Risk
16 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
16
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
64 / 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
22
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
1 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
laws of the state in which the Restaurant is located
State whose law governs disputes — relevant if you're not based there
What drove the 64/100 rating
Risk Score Breakdown
- 01MINORDeclining unit count: 12% YoY contraction (116 units) suggests system-wide performance deterioration or franchisee exits
- 02HIGHSignificant litigation history: 16 concluded legal actions involving franchise law violations and misrepresentations indicate regulatory/compliance concerns and potential franchisor credibility issues
- 03MINORNo territory protection: Franchisees lack exclusive market rights, enabling cannibalization and direct franchisor competition
- 04MINORHigh investment-to-revenue ratio: $6.1M maximum investment against $2.4M average revenue yields unfavorable ROI prospects and extended payback periods
- 05MEDUndisclosed net income: Absence of Item 19 financial performance representation prevents realistic profitability assessment
- 06MINOR5% royalty on declining revenues: Franchisor revenue shrinking while franchisees bear fixed costs in contracting system
- 07MED10-year commitment term: Long lock-in period with limited exit flexibility in deteriorating franchise environment
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.