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Elevated Risk
9 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
9
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
75 / 100
FranchiseVerdict composite
Rating
CAUTION
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
2
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$2.2M
Avg loan size
$1.1M
Participating lenders
2
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
Texas
State whose law governs disputes — relevant if you're not based there
What drove the 75/100 rating
Risk Score Breakdown
- 01HIGHCEO has history of material litigation at previous franchise (Altitude Franchising) including pending arbitrations and fraudulent inducement allegations from former franchisees
- 02MINOROnly 3 existing units with unknown/likely stagnant growth trajectory raises system viability concerns
- 03MEDHigh investment range ($1.85M–$4.125M) combined with zero disclosed financial performance metrics (no Item 19 equivalent) makes ROI impossible to validate
- 04HIGHGoing concern status indicates financial instability at corporate level, creating risk of franchisor collapse and loss of support
- 05HIGHCEO's litigation pattern suggests potential governance/ethics concerns that may carry forward to current franchise system
- 06MINORLack of revenue and profitability disclosure is a major red flag—prevents informed investment decision and suggests potential performance concealment
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.