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)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 70 / 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
- 84
- Government-backed loans issued
- Charge-off rate
- 14.6%
- vs 16% franchise average
- 5-yr charge-off rate
- 5.0%
- Defaults
- 7 loans
- Loans charged off or defaulted
- Total loan volume
- $19.0M
- Avg loan size
- $227K
- Participating lenders
- 46
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
- Not waived
- 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
- No
- Franchisor can match any purchase offer when you try to sell
- Governing law
- NJ
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
No litigation required to be disclosed in Item 3.
What drove the 70/100 verdict
Risk Score Breakdown
- 01MINORFranchise system declining at 1.2% YoY with only 1,659 units—suggests market saturation or franchisee dissatisfaction
- 02MINORNo average revenue or net income disclosure (Item 19) prevents validation of the $73,783–$165,920 investment ROI claim
- 03MINORRoyalty structure based on student enrollment ($36/full-paying, $18/partial) creates unpredictable, potentially unstable cash flow with no minimum guarantees
- 04MINORUnprotected territory exposes franchisees to direct competition from other Kumon franchisees and company-owned centers
- 05MEDVery low franchise fee ($2,000) relative to total investment suggests high hidden costs or ongoing capital requirements not disclosed upfront
- 06MED5-year term is short; renewal risk and lack of disclosed renewal rates increase uncertainty
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.