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B60/100FDD 2025

Hair Saloon — Litigation & Risk

Personal Services - Beauty & Salon · FDD Items 3, 4 & 5

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Lower Risk

No litigation cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
60 / 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
3
Government-backed loans issued
Default rate
33.3%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$876K
Avg loan size
$292K
Participating lenders
3

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

What drove the 60/100 rating

Risk Score Breakdown

  1. 01MEDUnit count declined 15.4% YoY (from ~18 to 15 units) — indicates system contraction and potential franchisee dissatisfaction
  2. 02HIGHGoing Concern = False suggests franchisor financial instability or operational distress
  3. 03MEDNet Income not disclosed — inability to validate profitability claims; franchisees cannot assess realistic ROI on $297.5K-$439K investment
  4. 04MEDHigh investment range ($297.5K-$439K) combined with 6% royalties creates significant breakeven pressure without disclosed profit margins
  5. 05MINORSmall franchise system (15 units) with declining trajectory reduces support infrastructure, marketing leverage, and brand momentum
  6. 06MEDFranchise fee ($35K) appears modest, but total cost burden is substantial relative to undisclosed net income and shrinking system viability

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.