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F88/100FDD 2023

Freshii — 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
88 / 100
FranchiseVerdict composite
Rating
AVOID
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
40
Government-backed loans issued
Default rate
32.4%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
12 loans
Loans charged off or defaulted
Total loan volume
$11.8M
Avg loan size
$295K
Participating lenders
26

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
Ontario, Canada
State whose law governs disputes — relevant if you're not based there

What drove the 88/100 rating

Risk Score Breakdown

  1. 01MINORSystem contracted 17.5% year-over-year (-9 units from ~52), indicating accelerating franchisee departures and potential market saturation or operational challenges
  2. 02HIGHGoing Concern warning signal suggests franchisor may face viability issues; combined with unit decline, raises questions about long-term support and system sustainability
  3. 03HIGHTwo breach of contract litigations (Lettuce Eatery Canada affiliate and Kore Meals/Freshii Development) indicate internal conflicts, partner disputes, and potential franchisor-franchisee relationship friction
  4. 04MINORNo Item 19 disclosure (average unit volumes, revenues, or profitability) prevents validation of ROI claims; $172.5K-$641K investment range lacks transparency on realistic returns
  5. 05MED6% royalty on undisclosed gross sales creates cash flow risk; without knowing average unit economics, franchisees cannot assess true profitability or break-even timelines
  6. 06MEDCompetitive QSR segment (health/juice bars) has high saturation and declining consumer traffic post-2020; Freshii's unit decline may reflect broader market contraction, not just brand weakness

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.