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A52/100FDD 2024

Papa Murphy's — Litigation & Risk

Food & Beverage - Pizza · FDD Items 3, 4 & 5

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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
52 / 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
119
Government-backed loans issued
Default rate
9.3%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
10 loans
Loans charged off or defaulted
Total loan volume
$32.2M
Avg loan size
$271K
Participating lenders
52

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

What drove the 52/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 2.3% YoY (1127 units) indicates system contraction and potential market saturation or operational challenges
  2. 02HIGHMultiple settled litigation cases involving misrepresentations and marketing obligations suggest compliance issues and franchisee disputes
  3. 03MINORNo average net income disclosure (Item 19) prevents assessment of actual profitability relative to $367-670K investment
  4. 04MINORUnprotected territory creates direct competition risk from other franchisees and corporate-owned locations in same area
  5. 05MINOR5% royalty on top of operating costs with declining unit economics may pressure franchisee margins
  6. 06MINORHigh investment range ($303K spread) with declining units raises questions about ROI and break-even timeline

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.