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F84/100FDD 2025

Hurts Donut — Litigation & Risk

Food & Beverage - Bakery · 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
84 / 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
16
Government-backed loans issued
Default rate
46.2%
vs <3% typical · system-wide
5-yr default rate
50.0%
Defaults
6 loans
Loans charged off or defaulted
Total loan volume
$4.9M
Avg loan size
$304K
Participating lenders
8

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

What drove the 84/100 rating

Risk Score Breakdown

  1. 01MEDSystem contracting sharply: 16 units with -16.7% YoY decline indicates potential franchisee dissatisfaction or unit closures
  2. 02MINORNo Item 19 net income disclosure despite $1.16M average revenue raises profitability transparency concerns
  3. 03MINORHigh investment-to-revenue ratio: $504k-$825k initial cost against ~$1.16M revenue suggests 6-12+ month breakeven timeline with no profit visibility
  4. 04MINORFranchise fee appears modest but royalty structure (7% of weekly gross) lacks context on actual net margins after COGS and labor
  5. 05MINORSmall system size (16 units) limits franchisor support infrastructure and negotiating power with suppliers

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.