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B66/100FDD 2024

Menchie's — Litigation & Risk

Food & Beverage - Ice Cream & Desserts · 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
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
234
Government-backed loans issued
Default rate
17.6%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
33 loans
Loans charged off or defaulted
Total loan volume
$66.4M
Avg loan size
$284K
Participating lenders
79

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

What drove the 66/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 6.6% YoY (297 units) indicates systemic contraction and potential franchisee dissatisfaction
  2. 02MINORNo Item 19 (average net income) disclosure raises transparency concerns about actual profitability claims
  3. 03MINORHigh initial investment ($165k-$425k) coupled with declining system suggests uncertain ROI and market saturation
  4. 04MINORRoyalty structure ($125 minimum + 6% of sales) creates fixed costs that may be unaffordable during slow periods, especially for locations with <$2,083 monthly revenue
  5. 05MED10-year term is long for a declining QSR franchise without disclosed unit economics or performance benchmarks

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.