D77/100FDD 2025
Fazoli's — Litigation & Risk
Food & Beverage - Full Service · FDD Items 3, 4 & 5
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
77 / 100
FranchiseVerdict composite
Rating
CAUTION
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
17
Government-backed loans issued
Default rate
28.6%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
2 loans
Loans charged off or defaulted
Total loan volume
$15.7M
Avg loan size
$926K
Participating lenders
13
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
Kentucky
State whose law governs disputes — relevant if you're not based there
What drove the 77/100 rating
Risk Score Breakdown
- 01MINORSystem declining at -7.3% YoY with only 195 units; indicates shrinking franchise base and weakening brand momentum
- 02MINORPending putative investor class action against parent and officers creates uncertainty about franchisor financial stability and management credibility
- 03MINORUnprotected territory exposes franchisees to cannibalization; franchisor can place competing units in your service area
- 04MINORExtremely thin net margins: $64,718 avg net income on $1.36M revenue (4.8% net margin) leaves minimal profit after 5% royalty and operating expenses
- 05HIGHHigh initial investment ($472.5K-$2.64M) with minimal investment protection given system contraction and litigation exposure
- 06HIGHGoing concern status indicates potential financial distress at parent company 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.