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B65/100FDD 2025

Little School of Music — Litigation & Risk

Education - Tutoring & Test Prep · 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
65 / 100
FranchiseVerdict composite
Rating
MODERATE
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
3 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 65/100 rating

Risk Score Breakdown

  1. 01MINOROnly 1 operating unit with unknown growth trajectory indicates unproven scalability and potential system collapse risk
  2. 02MINORNo Item 19 financial performance representation despite claiming $537,893 avg revenue—unverifiable claims raise transparency concerns
  3. 03MINORUnprotected territory creates direct competition risk; franchisor can open competing units in your market
  4. 04HIGHGoing Concern = False suggests potential franchisor financial instability or operational uncertainty
  5. 05MINOR8% royalty on $537k revenue = $43k+ annual ongoing fees with only 1 unit for support infrastructure
  6. 06MINORWide investment range ($248k-$619k spread of 150%) indicates unclear startup costs and poor cost controls
  7. 07MINOR10-year term is unusually long for an unproven single-unit franchise system

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.