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A51/100FDD 2025

Hteao — Litigation & Risk

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

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Lower Risk

No litigation cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
51 / 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
47
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
$54.9M
Avg loan size
$1.2M
Participating lenders
23

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

What drove the 51/100 rating

Risk Score Breakdown

  1. 01MEDNo average revenue or net income disclosed (Item 19) — impossible to assess profitability or ROI
  2. 02HIGHGoing Concern status is FALSE — indicates potential financial instability or liquidity issues at franchisor level
  3. 03MINORWide investment range ($387K–$1.9M spread of 392%) suggests inconsistent unit economics or unclear cost structure
  4. 04MINORExplosive 39.4% YoY unit growth may indicate aggressive recruitment ahead of sustainable sales infrastructure
  5. 05MED6% royalty on undisclosed revenue creates unpredictable franchisor cash flow and potential pressure on unit profitability
  6. 06HIGHNo litigation disclosed but going concern flag suggests potential hidden disputes or regulatory scrutiny

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.