A35/100FDD 2025
Padgett Business Services — Litigation & Risk
Business Services - Tax & Financial · 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
35 / 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
24
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
$8.1M
Avg loan size
$339K
Participating lenders
16
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
No
Franchisor can match any purchase offer when you try to sell
Governing law
Georgia
State whose law governs disputes — relevant if you're not based there
What drove the 35/100 rating
Risk Score Breakdown
- 01MINORStagnant unit growth (0.6% YoY) suggests market saturation or franchisee dissatisfaction in a 167-unit system
- 02MINORHigh franchise fee ($62,750) relative to investment range ($8,700-$117,025) creates misalignment and barrier to entry
- 03MINORUnprotected territory exposes franchisees to direct competition from same-brand operators and encroachment
- 04MINORNo Item 19 financial performance representations limits ability to validate $178k average net income claim
- 05MINORRoyalty floor of $1,500/month ($18k annually) creates break-even pressure for newer or slower-performing locations
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.