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B65/100FDD 2022

My Eyelab — Litigation & Risk

Retail · FDD Items 3, 4 & 5

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Moderate — Review

1 case disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
65 / 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
31
Government-backed loans issued
Default rate
14.3%
vs <3% typical · system-wide
5-yr default rate
20.0%
Defaults
2 loans
Loans charged off or defaulted
Total loan volume
$13.7M
Avg loan size
$442K
Participating lenders
19

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

What drove the 65/100 rating

Risk Score Breakdown

  1. 01MEDNo Item 19 (Average Net Income) disclosed — impossible to validate ROI claims or unit economics
  2. 02MINOR54.2% YoY unit growth is unsustainably aggressive and suggests potential recruitment over retention focus
  3. 03HIGHLitigation history: $200,000 settlement for fraud/breach of contract allegations raises franchisor credibility concerns
  4. 04MINOR4% royalty on gross sales (not net) creates cash flow pressure during slow periods
  5. 05HIGHGoing Concern status is FALSE — ambiguous language; clarify if this is a negative indicator
  6. 06MINORWide investment range ($299,858–$601,197) suggests high variability in startup costs and unclear cost structure
  7. 07MINOR$34,900 franchise fee is moderate but paired with high total investment signals significant working capital needs

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.