FranchiseVerdict
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D76/100FDD 2023

Parlay Cafe — Litigation & Risk

Food & Beverage - Full Service · 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
76 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

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

What drove the 76/100 rating

Risk Score Breakdown

  1. 01MINOROnly 1 operating unit signals minimal or failed franchise expansion despite offering since unknown date
  2. 02MINORNo average revenue or net income disclosure (Item 19) prevents accurate ROI assessment and suggests poor unit performance
  3. 03MINORRegulatory violation in March 2022 (unlicensed franchise show participation + $2,500 fine) indicates compliance gaps and potential enforcement risk
  4. 04HIGHGoing Concern = False indicates financial instability or accounting problems at franchisor level
  5. 05MINORUnprotected territory creates direct competition risk from other franchisees or franchisor-operated locations
  6. 06MEDHigh initial investment range ($202,950–$459,200) combined with 6% royalty on undisclosed revenue creates profitability uncertainty
  7. 07MINOR10-year term is long given single-unit track record and lack of proven unit economics
  8. 08MINORAbsence of growth trajectory (1 unit) suggests failed sales/support model or business model issues

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.