Go Mini's: Litigation & Risk
Business Services · FDD Items 3, 4 & 5
Moderate: Review
4 cases disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 4
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 66 / 100
- FranchiseVerdict composite · higher is better
- Rating
- A
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 5
- Government-backed loans issued
- Charge-off rate
- N/A
- vs 16% franchise average
- 5-yr charge-off rate
- N/A
- Defaults
- N/A
- Loans charged off or defaulted
- Total loan volume
- $2.6M
- Avg loan size
- $512K
- Participating lenders
- 4
FDD Items 5, 6 & 17: What You Give Up
Contract Risk Indicators
- Mandatory arbitration
- Not required
- You retain the right to sue in court
- Jury trial waiver
- Not waived
- Non-compete
- 1 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
- Florida
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Franchisor sued a terminated franchisee for breach/nonpayment of royalties, obtaining a $90,527 judgment after a $150,000 settlement was partly unpaid. Three older (2012-2013) state regulatory actions (NY, VA, MD) concerned pre-formation Dealer Agreements entered into by the franchisor's predecessor/parent before proper franchise registration; resolved via consent orders with modest fines ($3,500-$4,000) and no admission of wrongdoing.
What drove the 66/100 verdict
Risk Score Breakdown
- 01MEDNo Item 19 financial disclosure (average revenue and net income not disclosed) prevents ROI validation and comparability analysis
- 02MINORHistorical regulatory settlements (2002-2009) in NY, VA, MD for unregistered dealer agreements signal compliance/governance issues, even if predecessor-related
- 03HIGHActive litigation between franchisor and franchisee for breach of contract indicates operational or support friction and potential enforcement disputes
- 04MEDModest unit growth (9.4% YoY on 105 units = ~10 new units) combined with undisclosed financials raises questions about franchisee profitability and system sustainability
- 05MINORHigh initial investment range ($291K-$634K) without transparent earnings data creates significant downside risk with no benchmarking
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.