Kilwins: Litigation & Risk
Quick-Service Restaurants · FDD Items 3, 4 & 5
Moderate: Review
1 case disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 1
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 75 / 100
- FranchiseVerdict composite · higher is better
- Rating
- A
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 120
- Government-backed loans issued
- Charge-off rate
- 3.6%
- vs 16% franchise average
- 5-yr charge-off rate
- 0.0%
- Defaults
- 2 loans
- Loans charged off or defaulted
- Total loan volume
- $50.0M
- Avg loan size
- $417K
- Participating lenders
- 50
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
- 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
- MI
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Kilwins v. Berakovich et al. (Case No. 11-3196-CZ, Emmet County, Michigan) – franchisee competition covenant violation; settled April 2013 for $180,000 plus other terms.
What drove the 75/100 verdict
Risk Score Breakdown
- 01MEDNo Item 19 (Average Unit Volume) disclosed despite $933k average revenue claim — inability or unwillingness to substantiate earnings
- 02MEDSlow unit growth of 5.7% YoY with 172 units suggests mature/saturating market with limited expansion momentum
- 03HIGH2011 litigation over non-compete violations and fraud indicates franchisee disputes and enforcement challenges
- 04MINORHigh investment range ($295k–$880k) with wide variance suggests unpredictable startup costs and location-dependent performance
- 05MEDSeasonal business model (confectionery/chocolates) creates cash flow volatility not addressed in disclosed metrics
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.