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B66/100FDD 2023

Farm Stores / Swiss Farms — Litigation & Risk

Retail · 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
66 / 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
Florida
State whose law governs disputes — relevant if you're not based there

What drove the 66/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-4.3% YoY) indicates system contraction and potential franchisee dissatisfaction
  2. 02HIGHActive litigation (filed Feb 2023) alleging material misrepresentations about unit profitability and unfair real estate practices by affiliate — core business model issues
  3. 03MEDNet income not disclosed in Item 19 — inability to verify actual profitability despite $823,732 average revenue claim
  4. 04MINORHigh royalty structure (greater of 6% or $360/week = $18,720 annually minimum) creates significant fixed burden on lower-performing units
  5. 05MINORUnprotected territory exposes franchisees to direct competition from other brand units and cannibalization risk
  6. 06MINORWide investment range ($145K–$943K) suggests inconsistent costs and unclear unit economics
  7. 07MINORFranchise fee ($25K) combined with royalty floor creates high break-even threshold for marginal locations

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.