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Moderate — Review
2 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
74 / 100
FranchiseVerdict composite
Rating
CAUTION
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
147
Government-backed loans issued
Default rate
25.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
17 loans
Loans charged off or defaulted
Total loan volume
$25.3M
Avg loan size
$172K
Participating lenders
42
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
Texas
State whose law governs disputes — relevant if you're not based there
What drove the 74/100 rating
Risk Score Breakdown
- 01MINORDeclining unit growth (2.9% YoY) indicates system stagnation despite mature brand presence
- 02HIGHActive litigation against franchisees raises concerns about franchisor-franchisee relationship and potential disputes over marketing obligations
- 03MINORNo Item 19 (Average Unit Volumes) disclosure prevents validation of $773,574 average revenue claim and profitability assessment
- 04MINORDual royalty structure (7% vs 3.5%) creates complexity and potential disputes over revenue categorization and material/subcontractor definitions
- 05MEDHigh initial investment ($161,900–$215,000) combined with undisclosed net income creates uncertainty about ROI timeline and profitability
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.