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A41/100FDD 2024

Mathnasium — Litigation & Risk

Education - Tutoring & Test Prep · 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
41 / 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
109
Government-backed loans issued
Default rate
1.8%
vs <3% typical · system-wide
5-yr default rate
14.3%
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$16.9M
Avg loan size
$155K
Participating lenders
57

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

What drove the 41/100 rating

Risk Score Breakdown

  1. 01MEDMinimal unit growth of 1.8% YoY suggests system is stagnating or mature with limited expansion
  2. 02MINORNo Item 19 financial performance representations means average revenue/net income figures are unverified and may not reflect typical franchisee experience
  3. 03HIGHParent company litigation history (Arby's, Dunkin') regarding no-poaching and cybersecurity indicates corporate governance and operational risks that could affect franchise operations
  4. 04MINORHigh royalty burden at 10% plus typical 6-8% marketing fund reduces net margins significantly from claimed $115,743 average
  5. 05MINORTutoring/education sector vulnerability to economic downturns, school funding changes, and post-pandemic enrollment normalization

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.