B65/100FDD 2025
Kolache Factory — Litigation & Risk
Food & Beverage - Bakery · FDD Items 3, 4 & 5
Lower Risk
No litigation cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
65 / 100
FranchiseVerdict composite
Rating
MODERATE
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
31
Government-backed loans issued
Default rate
13.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
3 loans
Loans charged off or defaulted
Total loan volume
$10.2M
Avg loan size
$328K
Participating lenders
17
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
Texas
State whose law governs disputes — relevant if you're not based there
What drove the 65/100 rating
Risk Score Breakdown
- 01MINORUnit count declining 6.7% YoY indicates system contraction and potential franchisee dissatisfaction
- 02MEDNo Item 19 financial performance representation disclosed—actual franchisee earnings may differ significantly from $127k average net income
- 03MINORHigh initial investment ($641k–$937k) relative to modest average net income ($127k) yields 5-7 year payback with no guarantee of achieving averages
- 04MINOR6% royalty on $908k average revenue equals ~$54.5k annual fee, consuming 43% of average net income
- 05MINORDeclining unit base suggests difficulty recruiting and retaining franchisees; may indicate operational or market challenges not yet public
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.