FranchiseVerdict
Neighborhood Barre logo
D70/100FDD 2025

Neighborhood Barre — Litigation & Risk

Health & Fitness · FDD Items 3, 4 & 5

Back to overview

Elevated Risk

16 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
16
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
70 / 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
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$135K
Avg loan size
$135K
Participating lenders
1

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

What drove the 70/100 rating

Risk Score Breakdown

  1. 01HIGHExtensive litigation across parent company involving fraud allegations, breach of contract, and multi-state franchise registration violations affecting CEO and related brands
  2. 02MINORNo average net income disclosure despite $94K-$266K investment requirement and $160K average revenue — profitability metrics completely opaque
  3. 03MINOROnly 22 units with unknown growth trajectory in a mature fitness/wellness category suggests stagnant or declining system expansion
  4. 04MEDHigh royalty burden (greater of 7% or $250/week = $13K annually minimum) on $160K revenue creates thin margin risk without disclosed net income
  5. 05HIGHGoing concern status indicates parent company financial instability despite franchise obligations
  6. 06MINORMulti-state regulatory actions for franchise disclosure violations suggest systemic compliance failures in FDD documentation

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.