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D75/100FDD 2025

Ledgers — Litigation & Risk

Business Services - Tax & Financial · FDD Items 3, 4 & 5

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Elevated Risk

10 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
10
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

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
No
Franchisor can match any purchase offer when you try to sell
Governing law
Virginia
State whose law governs disputes — relevant if you're not based there

What drove the 75/100 rating

Risk Score Breakdown

  1. 01MED50% unit decline year-over-year indicates systemic franchise failure and severe market contraction
  2. 02HIGHPending litigation alleging fraud and breach of contract raises serious governance and trustworthiness concerns
  3. 03MEDNo disclosed average revenue or net income prevents assessment of franchisee profitability and ROI
  4. 04HIGHJohn Hewitt litigation history and Liberty Tax connection suggest pattern of legal and operational problems
  5. 05HIGHGoing concern status indicates potential insolvency and franchisor sustainability risk
  6. 06MEDHigh 10% royalty rate on undisclosed revenues creates opacity and cash flow risk for franchisees

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.