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A47/100FDD 2025

Five Guys® — Litigation & Risk

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

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Moderate — Review

2 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
47 / 100
FranchiseVerdict composite
Rating
STRONG
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
35
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$43.3M
Avg loan size
$1.2M
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
Virginia
State whose law governs disputes — relevant if you're not based there

What drove the 47/100 rating

Risk Score Breakdown

  1. 01MEDNo Item 19 (Average Unit Volume) disclosed — impossible to assess ROI against $927K-$1.38M investment
  2. 02MINORMinimal system growth (2.3% YoY on 1,558 units) suggests market saturation or declining franchisee interest
  3. 03MINORHigh initial investment ($927K-$1.38M) with 6% royalty burden and no transparent revenue benchmarks creates profitability opacity
  4. 04HIGH2024 active litigation involving COO (defamation/business interference) raises governance and leadership stability concerns
  5. 05MINOR2005 Maryland Consent Order indicates historical regulatory violations in pre-registration sales practices

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.