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B58/100FDD 2025

GradePower Learning — Litigation & Risk

Education - Tutoring & Test Prep · 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
58 / 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
1
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$465K
Avg loan size
$465K
Participating lenders
1

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 58/100 rating

Risk Score Breakdown

  1. 01MINORStagnant unit growth (2.0% YoY) suggests market saturation or franchisee satisfaction issues
  2. 02MINORNo Item 19 financial disclosure prevents validation of $125k-$226k investment ROI claims
  3. 03HIGHMultiple litigation matters (arbitration + 2 Canadian settlements) indicate franchisor-franchisee relationship strain
  4. 04MINORAggressive royalty floor ($1,250/month minimum) creates cash flow pressure for underperforming locations
  5. 05MEDHigh franchise fee ($37,500) relative to disclosed average revenue/income data (completely absent from FDD)
  6. 06MINOR10-year term lock-in combined with unclear unit economics increases downside risk exposure

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.