D77/100FDD 2025
Johnny Rockets — Litigation & Risk
Food & Beverage - Full Service · FDD Items 3, 4 & 5
Elevated Risk
8 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
8
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
77 / 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
39
Government-backed loans issued
Default rate
41.2%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
14 loans
Loans charged off or defaulted
Total loan volume
$20.7M
Avg loan size
$531K
Participating lenders
24
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
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
California
State whose law governs disputes — relevant if you're not based there
What drove the 77/100 rating
Risk Score Breakdown
- 01MINORUnit count declining 2.0% YoY with only 100 locations suggests system contraction and potential saturation or performance issues
- 02HIGHMultiple active litigation matters including putative investor class action against parent company FAT Brands raises governance and transparency concerns
- 03MEDNet income not disclosed in FDD Item 19 prevents accurate ROI assessment despite $1.64M average revenue
- 04HIGHGoing concern notation indicates FAT Brands has substantial doubt about continuity, signaling financial distress at corporate level
- 05MINORHigh initial investment range ($517K-$2.67M) combined with 6% royalty creates significant breakeven burden on $1.64M average sales
- 06HIGHSecurities litigation history and franchise registration disputes in Virginia suggest regulatory compliance and disclosure problems
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.