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A47/100FDD 2025

Koa — Litigation & Risk

Other · 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
47 / 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
54
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted

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
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
Montana
State whose law governs disputes — relevant if you're not based there

What drove the 47/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 1.4% YoY (478 units) suggests system contraction and potential market saturation
  2. 02MEDNo Item 19 financial disclosure (Avg Revenue/Net Income not disclosed) prevents meaningful ROI validation
  3. 03HIGHActive litigation over intellectual property use indicates brand management/compliance issues
  4. 04MINORExtreme investment range ($109K-$16.4M) suggests vastly different business models with unclear comparability
  5. 05MINOR8% royalty on gross receipts is high for hospitality; unprofitable units pay royalties on total registrations regardless of net income

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.