B66/100FDD 2025
Manchu WOK — Litigation & Risk
Food & Beverage - Quick Service · FDD Items 3, 4 & 5
Elevated Risk
21 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
21
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
66 / 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
1
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$275K
Avg loan size
$275K
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
1.5 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
Arizona
State whose law governs disputes — relevant if you're not based there
What drove the 66/100 rating
Risk Score Breakdown
- 01MINOROnly 15 units with unknown/stagnant growth trajectory suggests system contraction or stability crisis
- 02HIGHGoing Concern = False indicates franchisor financial distress and potential inability to support franchisees
- 03HIGH21 disclosed litigation actions involving predecessors/affiliates reveal pattern of breach of contract and misrepresentation claims
- 04MEDNet income not disclosed despite $1.89M average revenue — likely unprofitable unit economics or hidden losses
- 05MINORNo protected territory exposes franchisees to direct competition from other Manchu WOK locations and company-owned stores
- 06MINORHigh initial investment ($490K-$821K) paired with 7% royalty on gross (not net) creates unsustainable payback period
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.