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F79/100FDD 2023

Montauk Lobster House — 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
79 / 100
FranchiseVerdict composite
Rating
AVOID
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
New York
State whose law governs disputes — relevant if you're not based there

What drove the 79/100 rating

Risk Score Breakdown

  1. 01MINOROnly 2 units in system with unknown/likely stagnant growth trajectory raises viability concerns
  2. 02HIGHGoing Concern status = FALSE indicates potential financial distress or instability at franchisor level
  3. 03MEDNo Item 19 (average unit volumes) disclosed — inability or unwillingness to share revenue data is critical red flag
  4. 04MINORNo average net income data provided — impossible to assess actual profitability or ROI on $148K-$395K investment
  5. 05MEDExtremely limited franchise track record with only 2 locations makes performance validation nearly impossible
  6. 06MED5% royalty on undisclosed revenue base creates opacity; actual franchisee take-home is unverifiable
  7. 07MINORRestaurant sector with high operational complexity and typically thin margins (3-9%) — high failure risk

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.