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D72/100FDD 2025

Massage Envy — Litigation & Risk

Health & Wellness - Other · FDD Items 3, 4 & 5

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Elevated Risk

11 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
11
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
72 / 100
FranchiseVerdict composite
Rating
CAUTION
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
521
Government-backed loans issued
Default rate
8.5%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
40 loans
Loans charged off or defaulted
Total loan volume
$232.4M
Avg loan size
$446K
Participating lenders
113

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 72/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-4.2% YoY) signals system contraction and potential market saturation
  2. 02HIGHExtensive litigation involving membership billing practices, territorial disputes, and alleged misconduct by service providers creates legal and reputational risk
  3. 03MEDNet income not disclosed despite $1.14M average revenue — suggests thin or inconsistent margins that may not support the $719K-$1.08M investment
  4. 04MEDHigh initial investment ($719K-$1.08M) combined with 6% royalty leaves limited margin for error in a labor-intensive service business
  5. 05MINORNumerous customer lawsuits alleging provider misconduct indicate potential compliance and liability exposure for franchisees
  6. 06MED10-year term locks franchisees into commitment during period of system decline

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.