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A47/100FDD 2025

HobbyTown — Litigation & Risk

Retail · 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
47 / 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
15
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$5.1M
Avg loan size
$342K
Participating lenders
12

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

What drove the 47/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 6.0% YoY (94 units) indicates system contraction and potential market saturation or performance issues
  2. 02MINORNet income of only $84,160 on $1.46M average revenue (5.8% net margin) is extremely thin after accounting for 4.75% royalties, rent, labor, and inventory
  3. 03MEDNo Item 19 (financial performance representations) disclosed — franchisor provides no validated earnings data, making ROI projections unreliable
  4. 04MINORHigh initial investment range ($350K–$620K) paired with thin margins creates extended breakeven period and elevated risk of underperformance
  5. 05MINORHobby retail sector faces structural headwinds from e-commerce competition and shifting consumer spending toward experiences

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.