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D75/100FDD 2024
OTA World — Litigation & Risk
Personal Services - Beauty & Salon · FDD Items 3, 4 & 5
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
75 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Not required
You retain the right to sue in court
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 75/100 rating
Risk Score Breakdown
- 01MEDSystem contracting sharply: 21.7% unit decline YoY (18 units remaining) suggests franchisee failure/attrition
- 02MINORZero royalty fee structure may indicate franchisor lacks revenue model or confidence in franchisee profitability
- 03HIGHGoing Concern status = false: franchisor's ability to support franchise operations is questionable
- 04MINORNo financial disclosure (revenue/net income): impossible to validate franchisee earnings claims
- 05MINORNo Item 19 earnings claim: combined with declining units, suggests poor unit economics
- 06MINORFree franchise fee ($0) may indicate difficulty recruiting or desperation to inflate unit count
- 07MINOR$59K-$156K investment range is wide with no performance metrics to justify either end
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.