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
40 / 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
39
Government-backed loans issued
Default rate
3.2%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$43.5M
Avg loan size
$1.1M
Participating lenders
28
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
1 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
Kentucky
State whose law governs disputes — relevant if you're not based there
What drove the 40/100 rating
Risk Score Breakdown
- 01MINORUnit count declining 4.2% YoY indicating system contraction and potential market saturation
- 02MINORNo Item 19 (Average Unit Volume) disclosure prevents assessment of actual profitability relative to $1M-$3.7M investment
- 03HIGHRecent litigation (Chicken Shack Potsdam case) highlights franchisor's aggressive territory encroachment practices and willingness to open competing outlets despite protected territory claims
- 04MEDHigh initial investment ($1.05M-$3.77M) combined with undisclosed net income creates significant capital-at-risk with unclear ROI
- 05MINOR20-year term is lengthy with 4-5% royalties on declining unit count suggesting mature/saturated market
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.