FranchiseVerdict
Pancheros Mexican Grill logo
F79/100FDD 2025

Pancheros Mexican Grill — Litigation & Risk

Food & Beverage - Quick Service · FDD Items 3, 4 & 5

Back to overview

Moderate — Review

2 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
79 / 100
FranchiseVerdict composite
Rating
AVOID
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
36
Government-backed loans issued
Default rate
26.1%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
6 loans
Loans charged off or defaulted
Total loan volume
$12.0M
Avg loan size
$333K
Participating lenders
23

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

What drove the 79/100 rating

Risk Score Breakdown

  1. 01MEDNet income not disclosed in Item 19 — unable to assess actual profitability despite $1.61M average revenue
  2. 02MINORSlow unit growth at 4.2% YoY suggests market saturation or franchisee satisfaction issues in a 76-unit system
  3. 03HIGHActive 2024 litigation by franchisor indicates enforcement disputes and potential friction with franchisees
  4. 04MEDHigh investment range ($752.5K–$1.54M) relative to undisclosed net income creates ROI uncertainty
  5. 05HIGHNo 'going concern' status disclosed — potential financial stability questions about franchisor

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.