FranchiseVerdict
Magikid logo
B59/100FDD 2024

Magikid — Litigation & Risk

Education - Children's Programs · FDD Items 3, 4 & 5

Back to overview

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
59 / 100
FranchiseVerdict composite
Rating
MODERATE
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
Texas
State whose law governs disputes — relevant if you're not based there

What drove the 59/100 rating

Risk Score Breakdown

  1. 01MINORNo financial disclosure (Item 19) — cannot validate ROI claims or actual franchisee profitability
  2. 02HIGHGoing Concern issue — franchisor may have financial instability despite growth metrics
  3. 03MINORRapid unit growth (75% YoY) with only 16 units — suggests early-stage system with unproven unit economics
  4. 04MINORHigh minimum royalty ($1,000/month = $12,000/year) creates cash flow pressure on underperforming locations
  5. 05MEDInvestment range $144,850–$242,100 is substantial with zero disclosed average revenue/income benchmarks
  6. 06MINOR5-year term is shorter than industry standard (typically 10), suggesting higher franchisor risk or unproven model

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.