D75/100FDD 2026
Kahala Coffee Traders — Litigation & Risk
Food & Beverage - Quick Service · FDD Items 3, 4 & 5
Elevated Risk
19 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
19
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
75 / 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
1
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$377K
Avg loan size
$377K
Participating lenders
1
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
Arizona
State whose law governs disputes — relevant if you're not based there
What drove the 75/100 rating
Risk Score Breakdown
- 01MINORExtremely small and stagnant unit count (only 6 units with minimal 20% YoY growth from near-zero baseline)
- 02HIGHExtensive litigation history across multiple brands under same parent company, including registration violations and breach of contract cases in multiple states
- 03MEDNo disclosed average revenue or net income data (Item 19 absent), making ROI assessment impossible
- 04MINORHigh royalty burden structure ($300/week minimum = $15,600/year floor regardless of sales performance)
- 05MINORUnprotected territory creates direct competition risk from other franchisees and company-owned units
- 06MINORWide and unclear investment range ($88,400–$526,000) suggests inconsistent cost structure or hidden expenses
- 07HIGHParent company litigation involving predecessor brands (SweetFrog, Famous Dave's, Wetzel's, Papa Murphy's) indicates systemic compliance and operational issues
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.