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D75/100FDD 2024

Lighting Squad — 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
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
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
Minnesota
State whose law governs disputes — relevant if you're not based there

What drove the 75/100 rating

Risk Score Breakdown

  1. 01MINOROnly 1 operating unit despite franchise model — indicates system is pre-revenue or collapsing
  2. 02HIGHGoing Concern status is FALSE — franchisor may be insolvent or financially unstable
  3. 03MEDNo Item 19 financial disclosure (Avg Revenue/Net Income not disclosed) — impossible to validate ROI claims
  4. 04MINORHigh franchise fee ($25,000) + wide investment range ($33,650–$119,000) suggests undefined cost structure
  5. 05MED7% royalty on undisclosed revenue baseline — franchisee has no benchmark for profitability
  6. 06MINORSingle unit with unknown growth trajectory — no proof of concept or replicable model

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.