FranchiseVerdict
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F83/100FDD 2021

Palgong Tea — Litigation & Risk

Food & Beverage - Coffee & Tea · 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
83 / 100
FranchiseVerdict composite
Rating
AVOID
STRONG / MODERATE / CAUTION / AVOID

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

What drove the 83/100 rating

Risk Score Breakdown

  1. 01MINOROnly 1 existing unit—system shows no growth trajectory or scalability proof
  2. 02HIGHGoing Concern status is FALSE, indicating financial viability concerns at corporate level
  3. 03MINORNo Item 19 financial disclosure (avg revenue/net income)—impossible to validate ROI on $147,500-$185,700 investment
  4. 04MED5-year term is shorter than industry standard (10 years), suggesting limited franchisor commitment or high turnover
  5. 05MEDExtremely limited track record with single unit makes franchisee comparison and validation impossible
  6. 06HIGHNo disclosed litigation history doesn't mitigate systemic weakness—early-stage brand with minimal exposure

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.