D77/100FDD 2025
Gymboree Play & Music — Litigation & Risk
Education - Children's Programs · FDD Items 3, 4 & 5
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
77 / 100
FranchiseVerdict composite
Rating
CAUTION
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
18
Government-backed loans issued
Default rate
13.3%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
2 loans
Loans charged off or defaulted
Total loan volume
$4.0M
Avg loan size
$224K
Participating lenders
11
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
California
State whose law governs disputes — relevant if you're not based there
What drove the 77/100 rating
Risk Score Breakdown
- 01HIGHGoing Concern status is FALSE — franchisor financial viability is questioned
- 02MINORSystem declining sharply: 41 units with -9.1% YoY contraction indicates market rejection or operational failure
- 03MEDNo Item 19 (Average Unit Volume) disclosed — inability or unwillingness to share profitability data is a major transparency red flag
- 04HIGHActive litigation with $765,920 judgment against franchisee; franchisor pursuing collection through bankruptcy, suggesting cash flow desperation
- 05MEDWide investment range ($57K–$393K) with undisclosed net income creates opacity on actual ROI and unit economics
- 06MINOR6% royalty on gross receipts (not net) means franchisees pay fees even during losses; combined with declining unit count, suggests unit-level economics are deteriorating
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.