Moderate — Review
1 case disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
85 / 100
FranchiseVerdict composite
Rating
AVOID
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
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
Delaware
State whose law governs disputes — relevant if you're not based there
What drove the 85/100 rating
Risk Score Breakdown
- 01HIGHGoing concern status is FALSE — franchisor may be operationally or financially unstable
- 02MINORZero existing franchise units with unknown growth trajectory — no proven system or franchisee success stories
- 03MINOR50% royalty rate is extraordinarily high (industry standard 5-7%) — unsustainable profit model for franchisees
- 04HIGHActive litigation in Malaysia alleging unregistered franchise operation — regulatory compliance and legal exposure concerns
- 05MEDNo disclosed average revenue or net income data — inability to validate ROI on $96,250–$474,000 investment range
- 06MINORFranchise fee ($15,000) is low relative to total investment, suggesting hidden or escalating costs
- 07MINOR10-year term locks franchisees into high-royalty agreement with unproven brand and no exit strategy
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.