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B64/100FDD 2026

Fatburger — Litigation & Risk

Food & Beverage - Full Service · FDD Items 3, 4 & 5

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Elevated Risk

9 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
9
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
34
Government-backed loans issued
Default rate
14.3%
vs <3% typical · system-wide
5-yr default rate
33.3%
Defaults
3 loans
Loans charged off or defaulted
Total loan volume
$13.7M
Avg loan size
$402K
Participating lenders
23

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

What drove the 64/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 4.8% YoY indicates shrinking franchise system and potential market saturation or brand weakness
  2. 02MEDNet income not disclosed in FDD Item 19 — impossible to assess actual profitability despite $1.14M average revenue
  3. 03HIGHMultiple litigation cases including pending securities class action, franchise registration disputes, and breach of contract claims suggest systemic franchisor-franchisee relationship issues
  4. 04MEDHigh investment range ($517K–$2.66M) paired with undisclosed profitability creates significant downside risk with unclear return potential
  5. 05HIGHGoing concern disclosure raises questions about franchisor financial stability and long-term support capabilities
  6. 06MINOR6% royalty on top of operating costs in declining QSR category may create unsustainable unit economics

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.