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B56/100FDD 2024

Fosters Freeze — Litigation & Risk

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

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Lower Risk

No litigation cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
56 / 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
8
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
Total loan volume
$11.4M
Avg loan size
$1.4M
Participating lenders
8

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

What drove the 56/100 rating

Risk Score Breakdown

  1. 01MEDSystem shrinking: 61 units with -3.2% YoY decline indicates contraction and potential market saturation concerns
  2. 02MINORNo Item 19 (Net Income) disclosure: Cannot verify actual profitability; $1.28M average revenue doesn't guarantee positive returns after $178K-$1M investment
  3. 03MINORWide investment range ($178K-$1M): Suggests vastly different unit economics; unclear what drives 465% variance in initial investment
  4. 04MINORRoyalty structure complexity: 4-8% royalties on gross (not net) sales creates cash flow burden regardless of profitability
  5. 05MINORModest average revenue: $1.28M for quick-service/frozen dessert is acceptable but tight margin for covering 4-8% royalties plus labor and COGS

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.