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A53/100FDD 2025

Newk's Eatery — Litigation & Risk

Food & Beverage - Full Service · 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
53 / 100
FranchiseVerdict composite
Rating
STRONG
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
7
Government-backed loans issued
Default rate
40.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
2 loans
Loans charged off or defaulted
Total loan volume
$8.7M
Avg loan size
$1.2M
Participating lenders
5

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

What drove the 53/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 2.9% YoY suggests system contraction and potential franchisee dissatisfaction
  2. 02MINORNo Item 19 financial performance representations limits ability to validate average revenue/income claims
  3. 03MINORHigh initial investment ($1.02M-$1.41M) with modest 16% average net profit margin creates extended break-even period
  4. 04MINORRelatively low royalty rate (5%) may indicate tight franchisor margins and reduced support capacity
  5. 05MEDMid-tier unit count (95 units) provides limited brand recognition and purchasing power vs. larger chains

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.