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
- 40 / 100
- FranchiseVerdict composite · higher is better
- Rating
- C
- 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
- 26
- Government-backed loans issued
- Charge-off rate
- 25.0%
- vs 16% franchise average
- 5-yr charge-off rate
- N/A
- Defaults
- 3 loans
- Loans charged off or defaulted
- Total loan volume
- $3.0M
- Avg loan size
- $116K
- Participating lenders
- 16
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
- OH
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
One Consent Order with California Commissioner of Financial Protection and Innovation (May 2022) regarding franchisor's CPA not being registered as a public accounting firm in Ohio; administrative penalty of $10,000 paid.
What drove the 40/100 verdict
Risk Score Breakdown
- 01MINORUnit count declining 4.5% YoY (191 units) indicates system contraction and potential franchisee struggles
- 02MEDNo disclosed net income data prevents ROI validation; with $252K avg revenue and 6% royalty, actual profitability is opaque
- 03MINORRegulatory compliance issue in May 2022 (California Consent Order, $10K penalty) suggests operational/governance gaps
- 04MEDHigh initial investment ($65-91K) relative to disclosed average revenue creates breakeven pressure
- 05MINOR10-year term with 6% royalty on declining unit base raises sustainability concerns
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.