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A39/100FDD 2025

Paramount Tax & Accounting — Litigation & Risk

Business Services - Tax & Financial · 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
39 / 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
6
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted

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

What drove the 39/100 rating

Risk Score Breakdown

  1. 01MEDRegulatory violation: Maryland Securities Commissioner consent order (Feb 2023) for operating with expired franchise registration—indicates compliance gaps
  2. 02MINORHigh royalty burden: 10% on gross sales reduces net margins; at $497K avg revenue, that's ~$49.7K annually in royalties, impacting the $212.7K net income significantly
  3. 03MEDItem 19 absent: No financial performance claims disclosed in FDD; average revenue/net income figures are unverified and sourced from analyst data, not franchisor attestation
  4. 04MEDModest unit growth: 15.4% YoY growth is healthy but small system (92 units) provides limited peer network and economies of scale
  5. 05MEDHigh initial investment-to-fee ratio: $40K franchise fee represents 54-77% of total startup cost; limited financial cushion for working capital or underperformance period

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.