AStrongest tier80/100FDD 2025
Freddy’s Frozen Custard & Steakburgers: Litigation & Risk
Quick-Service Restaurants · FDD Items 3, 4 & 5
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)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 80 / 100
- FranchiseVerdict composite · higher is better
- Rating
- A
- A / B / C / D / F verdict grade
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
- KS
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Item 3 states no litigation is required to be disclosed.
What drove the 80/100 verdict
Risk Score Breakdown
- 01MEDNo Item 19 (Average Unit Volume) disclosed despite $1.89M average revenue being provided — suggests inconsistent profitability across units or franchisor unwilling to guarantee earnings potential
- 02HIGHGoing Concern status is FALSE — indicates potential financial distress at corporate level that could impact franchisee support, marketing funds, and supply chain stability
- 03MINORRoyalty rate increase from 4.5% to 5% effective July 1, 2025 — represents 11% fee increase for new franchisees, reducing unit economics and creating a two-tier system that may fragment the system
- 04MINORModest unit growth of 6.2% YoY — below QSR industry averages (8-12%), suggesting slower expansion and potential market saturation or franchisee dissatisfaction
- 05MEDHigh initial investment range ($785K–$2.75M) with high ongoing royalties leaves thin margins, especially without disclosed net income transparency
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.