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B65/100FDD 2024
Locals Love Us — Litigation & Risk
Business Services - Other · 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)
—
Franchisor or officer bankruptcy
Overall risk score
65 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.
Total 7(a) loans
1
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$123K
Avg loan size
$123K
Participating lenders
1
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
State where Business is located
State whose law governs disputes — relevant if you're not based there
What drove the 65/100 rating
Risk Score Breakdown
- 01HIGHGoing Concern status is FALSE — indicates potential financial instability or undisclosed operational challenges
- 02MEDNo Item 19 (Average Unit Volume) disclosed — impossible to assess ROI or validate the $66,750–$91,833 investment thesis
- 03MINOROnly 12 units systemwide with unknown growth trajectory — micro-franchise with no visibility into expansion momentum
- 04MED9% royalty on undisclosed revenues — cannot determine cash flow impact or breakeven timeline
- 05MINOR$29,500 franchise fee with $66,750–$91,833 total investment suggests significant ongoing costs (equipment, working capital, or initial inventory) that are not itemized
- 06MINOR5-year term is relatively short — increases renewal risk and limits long-term relationship visibility
- 07HIGHNo litigation disclosed but Going Concern issue suggests reputational or operational risk not yet reflected in lawsuits
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.