Gymboree Play & Music: Litigation & Risk
Education · FDD Items 3, 4 & 5
Moderate: Review
1 case disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 1
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 23 / 100
- FranchiseVerdict composite · higher is better
- Rating
- F
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off 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
- Charge-off rate
- 13.3%
- vs 16% franchise average
- 5-yr charge-off 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
- Not waived
- 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
- State where Center is located
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
GPPI, Inc. v. Mary Ann O'Neill et al. (E.D.N.Y. No. 22-cv-5167) — breach of contract, fraud, voidable transactions; default judgment of $765,920.13 entered in favor of GPPI in associated bankruptcy proceeding. GPPI is plaintiff/creditor.
What drove the 23/100 verdict
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.