FranchiseVerdict
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A51/100FDD 2024

Golden Krust Caribbean Restaurant — Litigation & Risk

Food & Beverage - Quick 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
51 / 100
FranchiseVerdict composite
Rating
STRONG
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
25
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
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
New York
State whose law governs disputes — relevant if you're not based there

What drove the 51/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-0.9% YoY) signals system contraction and potential franchisee dissatisfaction
  2. 02HIGHActive litigation involving non-competition, breach of contract, and discriminatory fee practices suggests franchisor-franchisee conflict and operational inconsistency
  3. 03MEDNet income not disclosed in Item 19 prevents accurate ROI calculation; with $212,600-$775,900 investment required, profitability opacity is critical gap
  4. 04MINORRoyalty floor of $250/week ($13,000 annually) creates fixed burden even during low-revenue periods, compressing margins for struggling locations
  5. 05MINORUnprotected territory exposes franchisees to direct competition from other Golden Krust units and cannibalization risk
  6. 06MINORModest average unit volume ($1.33M) against high investment ceiling suggests inconsistent unit performance and potential for below-average returns
  7. 07HIGHGoing Concern status (False) indicates franchisor financial instability or operational red flags flagged by accountants

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.