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A25/100FDD 2026

HOMEstretch — Litigation & Risk

Food & Beverage - Quick Service · 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
25 / 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
2
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$408K
Avg loan size
$204K
Participating lenders
1

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

What drove the 25/100 rating

Risk Score Breakdown

  1. 01MINORExplosive unit growth of 144.8% YoY suggests rapid expansion that may outpace quality control and support infrastructure
  2. 02MEDHigh minimum monthly royalty fee structure not disclosed—unclear if franchisees can hit profitability thresholds consistently
  3. 03MINORAverage net income of $273k against $385k revenue implies ~29% net margin, which is healthy but dependent on location and operational efficiency
  4. 04MEDNo Item 19 financial performance representations disclosed in FDD—cannot verify if average unit volumes are achievable for new franchisees
  5. 05MINORRapid scaling (144.8% growth) increases risk of franchisee cannibalization and market saturation in protected territories

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.