FranchiseVerdict
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B62/100FDD 2025

Fuzzy’s Taco Shop — Litigation & Risk

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

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Moderate — Review

3 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
3
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
62 / 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
56
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

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

What drove the 62/100 rating

Risk Score Breakdown

  1. 01MEDUnit count declined 11.5% YoY (117 units) indicating system contraction and franchisee struggles
  2. 02MINORThree active arbitration cases alleging unauthorized closures suggest franchisor-franchisee relationship breakdown and possible systemic operational issues
  3. 03MINORNo net income disclosure (Item 19) prevents accurate ROI assessment despite $1.56M maximum investment requirement
  4. 04HIGHGoing concern status = False indicates potential financial instability at corporate level affecting support and longevity
  5. 05MINORHigh initial investment range ($647K-$1.56M) paired with declining unit count creates poor risk-reward profile
  6. 06HIGH5% royalty on $1.59M average revenue = $79,500 annual franchisor take; insufficient to support multi-unit litigation and operations

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.