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B65/100FDD 2026

Nap Tea — Litigation & Risk

Food & Beverage - Coffee & Tea · 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
65 / 100
FranchiseVerdict composite
Rating
MODERATE
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
Non-compete
1 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
No
Franchisor can match any purchase offer when you try to sell
Governing law
California
State whose law governs disputes — relevant if you're not based there

What drove the 65/100 rating

Risk Score Breakdown

  1. 01MEDZero existing franchised units indicates brand has never successfully scaled or all units have failed/closed
  2. 02MINORNo Item 19 financial disclosure (average revenue/net income) prevents validation of $624k-$777k investment ROI
  3. 03MINORHigh franchise fee ($300k) represents 48% of total investment with zero proven unit economics to justify it
  4. 04MINOR5-year term is shorter than industry standard (10 years), suggesting franchisor may lack confidence in model longevity
  5. 05HIGHGoing Concern status indicates potential financial instability at corporate level, raising questions about franchisor viability

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.