FranchiseVerdict
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A26/100FDD 2025

Jersey Mike's — Litigation & Risk

Food & Beverage - Full Service · FDD Items 3, 4 & 5

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Moderate — Review

1 case disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
26 / 100
FranchiseVerdict composite
Rating
STRONG
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
420
Government-backed loans issued
Default rate
2.1%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
5 loans
Loans charged off or defaulted
Total loan volume
$170.1M
Avg loan size
$405K
Participating lenders
111

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
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
New Jersey
State whose law governs disputes — relevant if you're not based there

What drove the 26/100 rating

Risk Score Breakdown

  1. 01MEDNo Item 19 (Average Unit Volume) disclosed — inability to validate the $1.34M average revenue claim or profitability
  2. 02MINORUnprotected territory creates direct competition risk and cannibalization between franchise units
  3. 03HIGHWashington State litigation regarding 'no-poach' clauses signals potential employment law compliance issues across the system
  4. 04MINORWide investment range ($181K–$1.41M) suggests inconsistent unit economics and unclear actual costs
  5. 05MINOR6.5% royalty on gross receipts (not net) means franchisees pay regardless of profitability

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.