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B62/100FDD 2025

Palm Beach Beauty & Tan — 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
62 / 100
FranchiseVerdict composite
Rating
MODERATE
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
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
Texas
State whose law governs disputes — relevant if you're not based there

What drove the 62/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-0.3% YoY) suggests system contraction and potential market saturation in beauty/tanning segment
  2. 02HIGH2.5-year litigation with competitor (2022-2024) over IP/rebranding creates brand uncertainty and suggests operational/marketing vulnerabilities
  3. 03MINORNo protected territory exposes franchisees to direct competition from other Palm Beach Tan units and cannibalizing same market
  4. 04MINOREscalating royalty structure (4%→5%→6%) reduces profitability over time; at 6% royalty on $496K avg revenue = $29.8K annual ongoing fees
  5. 05MINORItem 19 (Financial Performance) absent — cannot verify if average revenue/net income figures are representative or survivorship-biased
  6. 06MINORHigh initial investment range ($648K-$1.1M) paired with modest net income ($121K avg) yields 5-9 year breakeven horizon with unprotected territory risk
  7. 07MEDConfidential settlement terms unknown — potential undisclosed operational or rebranding requirements could impact franchisee costs/liability

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.