B58/100FDD 2025
My Salon Suite — Litigation & Risk
Personal Services - Beauty & Salon · FDD Items 3, 4 & 5
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
58 / 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
8
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
$6.8M
Avg loan size
$848K
Participating lenders
6
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
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 58/100 rating
Risk Score Breakdown
- 01MINORHigh initial investment ($675K-$1.68M) with moderate unit growth (10.5% YoY) creates extended payback risk, especially given $1,000/month minimum royalty even in slow months
- 02HIGHSignificant litigation history: $8M settlement in Sept 2024 involving founder Brad Brutocao and key officers for breach of fiduciary duty raises governance and transparency concerns
- 03HIGH'Going Concern' status marked False suggests potential financial distress at corporate level, though contradicted by positive unit growth — requires clarification on corporate health
- 04MINORRoyalty structure heavily back-loaded: franchisees pay discounted rate (2.75%) only 6 months, then doubles to 5.5% with $1K minimum, creating cash flow cliff at month 12-13
- 05MEDMissing Item 19 (Financial Performance Representations): Average figures provided ($455K revenue, $194K net) lack substantiation, unit-by-unit breakdown, or timeframe — cannot validate true earning potential
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.