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
61 / 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
12
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
$4.9M
Avg loan size
$406K
Participating lenders
6
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
Nevada
State whose law governs disputes — relevant if you're not based there
What drove the 61/100 rating
Risk Score Breakdown
- 01MINORNo Item 19 financial performance representations (claimed avg net income of $957,373 is unverified and extraordinarily high relative to $451,565 average revenue — mathematically implausible)
- 02MINORUnprotected territory creates direct competition risk and limits pricing power in saturated markets
- 03MINORExplosive 480% YoY unit growth (20 → 30 units) suggests either aggressive expansion before market validation or aggressive recruitment during economic uncertainty
- 04HIGHGoing Concern status is FALSE, which should be TRUE for a healthy franchisor — potential solvency or sustainability concerns
- 05MINORWide investment range ($647K–$1.63M, 152% spread) indicates unclear cost structure or high variability in actual startup costs
- 06MINOR8% royalty on gross revenue is owed regardless of profitability, creating cash flow pressure in startup/ramp phases
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.