FranchiseVerdict
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B63/100FDD 2025

Mike’s Red Tacos — 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
63 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID

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
Franchisor’s Choice of Law State
State whose law governs disputes — relevant if you're not based there

What drove the 63/100 rating

Risk Score Breakdown

  1. 01MEDOnly 2 units in system with unknown growth trajectory suggests extremely limited track record and replicability validation
  2. 02MEDNet income not disclosed in FDD Item 19 prevents franchisee from assessing actual profitability despite $2.96M average revenue claim
  3. 03HIGHGoing Concern status is False, indicating potential financial instability or undisclosed operational challenges at franchisor level
  4. 04MINORWide investment range ($639.8K–$1.99M) with no clear cost breakdown suggests inconsistent unit economics or hidden variables
  5. 05MINORMicro-franchise system (2 units) creates high risk of franchisor collapse before franchisee reaches profitability
  6. 06HIGHNo litigation disclosed but minimal system size limits statistical relevance of this claim

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.