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B59/100FDD 2024

Organic Bronze Bar — Litigation & Risk

Personal Services - Beauty & Salon · 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
59 / 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
1
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$59K
Avg loan size
$59K
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
Oregon
State whose law governs disputes — relevant if you're not based there

What drove the 59/100 rating

Risk Score Breakdown

  1. 01MINORNo average revenue or net income disclosure (Item 19) — impossible to validate ROI on $106.6k-$307.9k investment
  2. 02MED2017 regulatory violation: franchise sold without registration and missing required disclosures to Washington State — suggests compliance gaps or aggressive sales practices
  3. 03MINORRapid growth (66.7% YoY) with only 12 units is unsustainable trajectory and may indicate aggressive recruitment over unit profitability
  4. 04MINOR8% royalty on gross (not net) revenues begins day 91 — franchisees pay even if unprofitable, creating cash flow risk
  5. 05MEDOnly 12 franchise units total — extremely small system with limited peer benchmarking and high failure impact per unit
  6. 06MINORNo disclosure of average unit volume, payback period, or break-even timeline — financial viability is opaque

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.