CAverage44/100FDD 2024
Lean Kitchen: Litigation & Risk
Full-Service Restaurants · 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)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 44 / 100
- FranchiseVerdict composite · higher is better
- Rating
- C
- 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
- 15
- Government-backed loans issued
- Charge-off rate
- 0.0%
- vs 16% franchise average
- 5-yr charge-off rate
- 0.0%
- Defaults
- 0 loans
- Loans charged off or defaulted
- Total loan volume
- $3.4M
- Avg loan size
- $224K
- Participating lenders
- 6
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
- Not waived
- 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
- MO
- 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
What drove the 44/100 verdict
Risk Score Breakdown
- 01MEDNo Item 19 (Average Net Income) disclosed — cannot validate ROI or profitability claims
- 02HIGHGoing Concern status is FALSE — suggests franchisor may have undisclosed financial or operational vulnerabilities
- 03MINORWide investment range ($151K-$441K) indicates inconsistent unit economics or unclear startup costs
- 04MEDOnly 32 units system-wide — small franchise with limited scale and support infrastructure
- 05MINOR6% royalty on 'Adjusted Gross Sales' (non-standard metric) — potential for disputes over what qualifies
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.