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D75/100FDD 2026

Howard Johnson — Litigation & Risk

Lodging - Hotels & Motels · FDD Items 3, 4 & 5

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Elevated Risk

14 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
14
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
75 / 100
FranchiseVerdict composite
Rating
CAUTION
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
201
Government-backed loans issued
Default rate
11.9%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
23 loans
Loans charged off or defaulted
Total loan volume
$276.0M
Avg loan size
$1.4M
Participating lenders
84

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
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
No
Franchisor can match any purchase offer when you try to sell
Governing law
New Jersey
State whose law governs disputes — relevant if you're not based there

What drove the 75/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-4.3% YoY) indicates shrinking franchise system and potential brand deterioration
  2. 02MEDNo disclosed average revenue or net income (missing Item 19) prevents realistic ROI assessment and suggests weak unit economics
  3. 03HIGHMultiple active litigation matters including price-fixing conspiracies, mandatory fee disputes, and breach of contract claims create legal and reputational liability
  4. 04MINORFTC settled action for cyberattacks indicates past data security failures and regulatory scrutiny
  5. 05MINORWide investment range ($349K-$11.9M) suggests inconsistent unit performance and unclear capital requirements
  6. 06MED5% royalty on gross room revenues provides limited margin protection during downturns
  7. 07HIGHGoing Concern status is FALSE, signaling potential financial instability at corporate level

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.