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F80/100FDD 2023

Hooters — Litigation & Risk

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

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Elevated Risk

9 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
9
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
80 / 100
FranchiseVerdict composite
Rating
AVOID
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
6
Government-backed loans issued
Default rate
50.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
3 loans
Loans charged off or defaulted
Total loan volume
$2.4M
Avg loan size
$394K
Participating lenders
4

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

What drove the 80/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-3.8% YoY) indicates system contraction and market challenges
  2. 02HIGHMultiple litigation cases involving breach of contract, abandonment, and financial obligation failures suggest operational and legal instability
  3. 03MINORNo Item 19 (Net Income) disclosure prevents accurate ROI assessment despite $1.26M-$4.1M investment requirement
  4. 04HIGHGoing Concern status is FALSE, indicating potential financial viability concerns at corporate level
  5. 05MINORHigh investment range ($1.26M-$4.1M) combined with declining units suggests poor unit economics or market saturation
  6. 06HIGHLitigation pattern includes franchise failures (unauthorized abandonment) indicating franchisee distress
  7. 07MED5% royalty on average $3.57M revenue ($178.75K annually) is sustainable only if net margins are healthy—which are undisclosed

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.