FranchiseVerdict
Gong cha logo
B64/100FDD 2025

Gong cha — Litigation & Risk

Food & Beverage - Coffee & Tea · FDD Items 3, 4 & 5

Back to overview

Moderate — Review

5 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
5
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
64 / 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
15
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
$3.8M
Avg loan size
$251K
Participating lenders
12

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

What drove the 64/100 rating

Risk Score Breakdown

  1. 01MINOROnly 6 operating units indicates a micro-franchise system with minimal scale and unclear growth trajectory
  2. 02MINORMultiple regulatory violations across three states (CA, MD, VA) suggest systemic compliance and disclosure issues
  3. 03HIGHMaster franchise renewal dispute with court litigation and arbitration indicates franchisor-franchisee relationship deterioration and territorial instability
  4. 04MEDNet income not disclosed despite $439,522 average revenue, making true profitability assessment impossible
  5. 05MEDHigh initial investment ($184,500–$627,060) relative to system size creates significant capital risk with limited track record
  6. 06HIGHGoing Concern status is FALSE, indicating potential financial viability concerns at corporate level

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.