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A45/100FDD 2025

Grasons — Litigation & Risk

Other · FDD Items 3, 4 & 5

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Moderate — Review

1 case disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
45 / 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
4
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
Total loan volume
$520K
Avg loan size
$130K
Participating lenders
2

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

What drove the 45/100 rating

Risk Score Breakdown

  1. 01MINORNo net income disclosure (Item 19) — unable to verify profitability claims against $246k average revenue
  2. 02HIGH2016 litigation settlement for unregistered territory sales indicates regulatory compliance issues and potential for territory disputes
  3. 03MINORHigh minimum royalty floor ($500-$1,000/mo = $6,000-$12,000 annually) creates negative cash flow risk for underperforming locations
  4. 04MINORRapid unit growth (30.4% YoY) with only 60 total units suggests early-stage franchise system with unproven sustainability
  5. 05MINORVague affiliate liability — unclear if corporate oversight prevents future violations like 2016 Virginia case

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.