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B67/100FDD 2026

Mellow Mushroom — Litigation & Risk

Food & Beverage - Full Service · FDD Items 3, 4 & 5

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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
67 / 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
142
Government-backed loans issued
Default rate
15.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
18 loans
Loans charged off or defaulted
Total loan volume
$143.5M
Avg loan size
$1.0M
Participating lenders
40

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Not required
You retain the right to sue in court
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
Georgia
State whose law governs disputes — relevant if you're not based there

What drove the 67/100 rating

Risk Score Breakdown

  1. 01MEDUnit count declined 3.1% YoY (161 units) indicating system contraction and potential market saturation or franchisee struggles
  2. 02MEDNet income not disclosed in Item 19 — impossible to assess actual profitability despite $2.68M average revenue; royalty burden at 5% unclear without expense breakdown
  3. 03MINORHigh investment range ($1.33M-$4.84M) with wide variance suggests inconsistent unit economics or significant location-dependent costs
  4. 04MINOR15-year term locks franchisee into long commitment with shrinking support network and declining peer learning community
  5. 05HIGHNo litigation disclosed but declining units may mask underlying franchisee disputes, quality issues, or brand weakness

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.