Moderate — Review
3 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
3
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
2
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$539K
Avg loan size
$269K
Participating lenders
2
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
Arizona
State whose law governs disputes — relevant if you're not based there
What drove the 76/100 rating
Risk Score Breakdown
- 01HIGHLitigation history: Three arbitrations involving sister brand (Zippy Shell) alleging breach of contract, misrepresentation of territory exclusivity, and fraudulent inducement—suggests systemic compliance issues across franchisor's portfolio
- 02HIGHGoing Concern status is FALSE: Indicates franchisor may lack financial stability or has disclosed material doubts about ability to continue operations
- 03MEDNo financial transparency: Average revenue and net income not disclosed; impossible to validate ROI on $219K-$374.6K investment with 6% royalty minimum $500/month ($6K annually)
- 04MEDMinimal unit base with unknown growth: Only 13 units with no disclosed growth trajectory raises scalability and system viability questions
- 05MINORHigh royalty floor relative to small operators: $500/month minimum royalty ($6K/year) represents 2.7% of minimum investment annually before profit—unsustainable for struggling locations
- 06MEDInadequate disclosure in FDD: Missing Item 19 (financial performance) prevents franchisee from benchmarking location profitability or validating franchisor revenue claims
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.