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B59/100FDD 2026

Goosehead Insurance — Litigation & Risk

Business Services - Tax & Financial · FDD Items 3, 4 & 5

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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
59 / 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
47
Government-backed loans issued
Default rate
5.9%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$11.9M
Avg loan size
$253K
Participating lenders
30

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 59/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-8.5% YoY) signals system contraction and potential franchisee dissatisfaction
  2. 02MINORExtremely high royalty burden: 20% initial + 50% renewal terms creates severe cash flow pressure on $90k average revenue
  3. 03MEDNo disclosed average net income prevents evaluation of actual profitability after 20-50% royalty extraction
  4. 04HIGHMultiple litigation cases involving franchisor collection actions and settled franchisee disputes indicate operational/relationship friction
  5. 05MINORUnprotected territory increases competition risk and customer poaching among franchisees
  6. 06MINORNo Item 19 financial data disclosure limits transparency and comparative performance benchmarking
  7. 07MINOR10-year term with 50% renewal royalty creates long-term financial lock-in with unfavorable economics

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.