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
55 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID
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
Delaware
State whose law governs disputes — relevant if you're not based there
What drove the 55/100 rating
Risk Score Breakdown
- 01HIGHGoing Concern status indicates potential financial instability or solvency issues at franchisor level
- 02MINOROnly 7 units systemwide suggests nascent/stalled growth with unclear expansion trajectory
- 03MEDNo Item 19 (financial performance representation) disclosed — cannot validate claimed $376K avg net income
- 04MINOR8% royalty on $1.2M avg revenue = $96K annual ongoing costs, creating significant breakeven pressure
- 05MINORHigh investment range ($217K–$467.5K) relative to small unit count raises capital efficiency questions
- 06MINOR5-year term is short; franchisor may lack commitment or franchisees may lack confidence in renewal
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.