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A41/100FDD 2024
Hounds Town USA — Litigation & Risk
Personal Services - Pet Care · FDD Items 3, 4 & 5
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
41 / 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
76
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
$43.5M
Avg loan size
$572K
Participating lenders
31
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
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
Florida
State whose law governs disputes — relevant if you're not based there
What drove the 41/100 rating
Risk Score Breakdown
- 01MINORExplosive 45.9% YoY unit growth is unsustainable and suggests aggressive recruitment over profitability focus; typical mature franchises grow 5-15% annually
- 02MINORNet income of $155,505 on $597,260 revenue (26% net margin) appears inflated — industry standard for pet services is 10-15%; suggests either aggressive accounting or cherry-picked top performers in Item 19
- 03HIGHLitigation history involving breach of contract on buildout assistance indicates franchisor-franchisee disputes over support promises; 'dismissed with prejudice' may reflect settlement rather than merit
- 04MINORHigh royalty rate (6%) combined with high investment ceiling ($1.06M) creates substantial fixed costs with thin margins; breakeven analysis needed
- 05MINORFranchise fee ($49K) seems low relative to investment range, suggesting franchisor prioritizes recruitment velocity over franchisee success
- 06MINORNo Item 19 financial data provided; averages cited may not represent median performance — top 20% likely distort the picture
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.