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D76/100FDD 2025

iFoam — Litigation & Risk

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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
76 / 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
66
Government-backed loans issued
Default rate
26.7%
vs <3% typical · system-wide
5-yr default rate
26.7%
Defaults
4 loans
Loans charged off or defaulted
Total loan volume
$28.4M
Avg loan size
$430K
Participating lenders
4

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
No
Franchisor can match any purchase offer when you try to sell
Governing law
Pennsylvania
State whose law governs disputes — relevant if you're not based there

What drove the 76/100 rating

Risk Score Breakdown

  1. 01MEDSevere unit decline of -25.9% YoY (90 units) signals system deterioration and franchisee dissatisfaction
  2. 02HIGHGoing Concern = False indicates franchisor may lack financial stability to support franchise operations
  3. 03HIGHActive fraud/misrepresentation lawsuit from former franchisee combined with internal ownership arbitration suggests governance dysfunction and potential credibility issues
  4. 04MEDNet income not disclosed despite $1.36M average revenue—lack of transparency on profitability is a major red flag
  5. 05MEDHigh royalty structure (greater of $3,000/month or $3 per 1,000 population) may be unsustainable given undisclosed margins and shrinking unit base

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.