F78/100FDD 2024
Huntington Learning Center — Litigation & Risk
Education - Tutoring & Test Prep · FDD Items 3, 4 & 5
Moderate — Review
2 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
78 / 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
225
Government-backed loans issued
Default rate
34.8%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
65 loans
Loans charged off or defaulted
Total loan volume
$53.8M
Avg loan size
$239K
Participating lenders
81
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
Delaware
State whose law governs disputes — relevant if you're not based there
What drove the 78/100 rating
Risk Score Breakdown
- 01MEDUnit decline of 2.5% YoY indicates shrinking franchise system with potential saturation or performance issues
- 02HIGHLitigation history includes fraud/misrepresentation allegation (settled 2023) suggesting franchisor-franchisee trust concerns
- 03MEDAverage Net Income not disclosed in Item 19 prevents accurate ROI analysis on $163k-$302k investment
- 04MED9.5% royalty on $561k average revenue equals ~$53k annual fee, leaving limited margin for operating costs and profit
- 05MINORHigh initial investment ($36k franchise fee + $163k-$302k startup) with no profitability transparency creates significant financial risk
- 06MINOR10-year term commitment in declining system reduces exit flexibility if unit economics deteriorate further
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.