FranchiseVerdict
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D68/100FDD 2022

LeTip — Litigation & Risk

Other · FDD Items 3, 4 & 5

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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
68 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

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
Arizona
State whose law governs disputes — relevant if you're not based there

What drove the 68/100 rating

Risk Score Breakdown

  1. 01MEDNo average revenue or net income disclosure (Item 19 missing) — impossible to assess actual profitability or ROI
  2. 02MINORHigh royalty rate of 17% on gross revenues significantly reduces net margins and increases break-even threshold
  3. 03MINOROnly 57 units with unknown growth trajectory — insufficient scale and unclear system health/momentum
  4. 04MINORInitial investment of $47,610–$64,900 with $40,000 franchise fee (82% of low-end investment) leaves minimal working capital
  5. 05MEDNo disclosed unit growth data — cannot verify if franchise is expanding, stagnant, or contracting

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.