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B63/100FDD 2026

Graduate by Hilton — Litigation & Risk

Lodging - Hotels & Motels · FDD Items 3, 4 & 5

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Elevated Risk

15 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
15
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
63 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID

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
Waived
You give up the right to a jury trial
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
No
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 63/100 rating

Risk Score Breakdown

  1. 01MEDExtremely high capital investment ($18.9M+) with no disclosed average revenue or net income—impossible to calculate ROI
  2. 02MEDMinimal system growth (3.1% YoY) with only 33 units suggests weak franchise model appeal and limited brand momentum
  3. 03MINORMultiple pending antitrust lawsuits regarding revenue management software and data sharing create operational and financial liability exposure
  4. 04HIGHHistory of concluded litigation over deceptive guest fee practices and franchise termination disputes indicates systemic franchisee-franchisor conflict
  5. 05MINORNo protected territory despite massive investment and 23-year commitment creates risk of same-brand cannibalization
  6. 06MINOR5% royalty on gross rooms revenue (not net) is punitive during low-occupancy periods and reduces franchisee flexibility
  7. 07MINORAbsence of Item 19 financial performance disclosure prevents validation of unit economics and profitability claims

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.