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
79 / 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
14
Government-backed loans issued
Default rate
30.8%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
4 loans
Loans charged off or defaulted
Total loan volume
$2.1M
Avg loan size
$148K
Participating lenders
13
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
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
California
State whose law governs disputes — relevant if you're not based there
What drove the 79/100 rating
Risk Score Breakdown
- 01MINORDeclining unit count (-5.1% YoY from 5,253 units) indicates shrinking franchise system and potential market saturation
- 02MEDNo average revenue or net income disclosure (missing Item 19) prevents realistic ROI assessment and profitability validation
- 03MINORHigh royalty rate of 20% on gross enrollment fees creates significant ongoing burden with no revenue floor guaranteed
- 04MINORTwo separate state regulatory actions (NY 1987, WI 1985) for franchise law violations and antitrust issues signal historical compliance problems
- 05MEDUnprotected territory means unlimited franchisee competition within service areas and cannibalizing of revenue streams
- 06MINORLow initial investment ($2,140-$40,735) suggests low barriers to entry and high franchisee turnover risk
- 07MINOR5-year term with no territory protection creates renewal uncertainty and makes long-term business planning difficult
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.