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A51/100FDD 2024

Madabolic — Litigation & Risk

Health & Fitness · FDD Items 3, 4 & 5

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Moderate — Review

3 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
3
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
51 / 100
FranchiseVerdict composite
Rating
STRONG
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
19
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$8.8M
Avg loan size
$464K
Participating lenders
11

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
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
North Carolina
State whose law governs disputes — relevant if you're not based there

What drove the 51/100 rating

Risk Score Breakdown

  1. 01HIGHCEO has pattern of litigation across multiple ventures (2015 mortgage crisis civil action, 2020 Zippy Shell arbitration for fraudulent induction and territory breach, 2023 Washington State unregistered broker consent orders)
  2. 02MINORNo protected territory despite high initial investment ($297.5K-$602.5K) and royalty floor of $1,500/month creating direct competition risk
  3. 03MINORSmall system size (30 units) with modest YoY growth (22.7%) limits brand recognition, supplier leverage, and franchisee support infrastructure
  4. 04MINORProfitability concern: average net income of $56,272 on $415,149 revenue (13.5% net margin) barely exceeds $18,000 annual royalty obligation, leaving minimal buffer for operational variability
  5. 05HIGHGoing concern notation suggests financial instability at franchisor level, potentially impacting support, marketing, and system viability
  6. 06MINORZippy Shell arbitration pattern suggests CEO may repeat territorial/inducement issues in current 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.