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B55/100FDD 2024

M14Hoops — Litigation & Risk

Education - Children's Programs · 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
55 / 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
2
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
$190K
Avg loan size
$95K
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
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
Illinois
State whose law governs disputes — relevant if you're not based there

What drove the 55/100 rating

Risk Score Breakdown

  1. 01MEDNo Item 19 (Financial Performance Representations) disclosed — cannot verify if average revenue/net income figures are typical or cherry-picked
  2. 02MINORExtreme unit growth (600% YoY) suggests either rapid expansion or very small base (likely only ~1-2 units existed 12 months ago) — sustainability unclear
  3. 03HIGHGoing Concern status is FALSE — indicates franchisor may be operating without established financial stability or operational track record
  4. 04MINORHigh franchise fee ($49,500) relative to 10-unit system size raises questions about franchisor's business model and revenue dependency
  5. 05MINOR8% royalty on gross (not net) sales is aggressive and leaves little margin for error on $121k average net income across $518k revenue

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.