FranchiseVerdict
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B59/100FDD 2025

Honest — Litigation & Risk

Food & Beverage - Full Service · FDD Items 3, 4 & 5

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Moderate — Review

1 case disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
59 / 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
4
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
$1.9M
Avg loan size
$466K
Participating lenders
3

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

What drove the 59/100 rating

Risk Score Breakdown

  1. 01MEDNo Item 19 financial performance data disclosed (average revenue and net income not provided) — impossible to assess profitability and ROI on $1.86M-$2.69M investment
  2. 02HIGHActive litigation against franchisee in May 2024 for breach of restrictive covenants suggests enforcement challenges and potential disputes over post-termination obligations
  3. 03MEDSlow unit growth of only 11.1% YoY with only 40 units total indicates limited brand momentum and market traction
  4. 04MINORUnprotected territory creates direct competition risk — franchisor can place additional units in your market without compensation
  5. 05MED5.5% royalty on undisclosed revenues creates uncertainty about actual net profitability after fees and operating costs
  6. 06MEDHigh initial investment ($1.86M-$2.69M) relative to small franchise system size and growth rate suggests limited economies of scale

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.