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D75/100FDD 2025
Mucho Burrito — Litigation & Risk
Food & Beverage - Full Service · FDD Items 3, 4 & 5
Elevated Risk
20 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
20
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
75 / 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
1
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$282K
Avg loan size
$282K
Participating lenders
1
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
Arizona
State whose law governs disputes — relevant if you're not based there
What drove the 75/100 rating
Risk Score Breakdown
- 01HIGHGoing Concern status is FALSE, indicating potential financial instability or restructuring risk at parent company level
- 02HIGHSignificant litigation history across parent company brands involving breach of contract, misrepresentation, and state regulatory violations in multiple states (MD, NY, VA)
- 03MINORNo Item 19 (average unit volumes) disclosure — impossible to validate $470K-$925K investment against realistic profit potential
- 04MINOROnly 1 unit reported with unknown growth trajectory — suggests either new franchise system or significant unit contraction
- 05MINORUnprotected territory creates direct competition risk from other Mucho Burrito franchisees in same market
- 06MEDHigh initial investment ($470K-$925K) with 6% royalty plus $10/week surcharge structure on undisclosed revenue base
- 07MED10-year term lock-in period with no disclosed exit liquidity or resale market data
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.