Moderate — Review
3 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
3
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
70 / 100
FranchiseVerdict composite
Rating
CAUTION
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
9
Government-backed loans issued
Default rate
11.1%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$8.9M
Avg loan size
$986K
Participating lenders
6
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
1 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
Maryland
State whose law governs disputes — relevant if you're not based there
What drove the 70/100 rating
Risk Score Breakdown
- 01MEDSystem collapse: 32% unit decline YoY indicates severe franchisee distress and potential systemic failure
- 02MEDNo financial transparency: Average revenue and net income not disclosed prevents accurate ROI assessment
- 03HIGHGoing concern status false: Franchisor may lack financial stability to support franchisees
- 04HIGHPattern of litigation: Three disclosed lawsuits including $1.85M settlement suggests operational/contractual issues
- 05MINORNo territory protection: Franchisees face direct competition from other franchisees and franchisor-owned locations
- 06MINORUnknown royalty structure: Hidden or variable fees could erode already-unclear profit margins
- 07MINORZero franchise fee masks exploitation: May indicate franchisor profits primarily from royalties rather than franchisee success
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.