B59/100FDD 2025
Magnolia Soap and Bath Co. — Litigation & Risk
Retail · FDD Items 3, 4 & 5
Moderate — Review
2 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
2
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
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
24
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
$5.0M
Avg loan size
$209K
Participating lenders
7
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
Mississippi
State whose law governs disputes — relevant if you're not based there
What drove the 59/100 rating
Risk Score Breakdown
- 01HIGHGoing Concern status is False — indicates potential financial instability or accounting issues at franchisor level
- 02HIGHPending litigation from former franchisee alleging fraud and violations of Ohio Business Opportunity Plan Act creates legal/regulatory exposure
- 03MEDNet Income not disclosed in FDD Item 19 — impossible to validate profitability claims against $271,900–$498,500 investment range
- 04MINORPrior IP infringement lawsuit settled for $50,000 (2022) suggests product/branding vulnerability in competitive soap market
- 05MINOR67% YoY unit growth appears strong but only 50 total units indicates small, volatile system susceptible to individual closures
- 06MINOR7% royalty on gross sales with no net income data means true take-home profit is unknowable
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.