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D75/100FDD 2025

Party Palace Exotic Rides — Litigation & Risk

Other · FDD Items 3, 4 & 5

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Lower Risk

No litigation cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
75 / 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 75/100 rating

Risk Score Breakdown

  1. 01HIGHGoing concern status is FALSE — indicates financial distress or operational instability at corporate level
  2. 02MINOROnly 3 units system-wide with unknown growth trajectory suggests minimal scale and unproven business model
  3. 03MINORNo Item 19 financial performance disclosure (Avg Revenue and Net Income) prevents ROI validation and suggests poor unit economics
  4. 04MINORWide investment range ($145,550–$524,325) indicates inconsistent startup costs and unclear capital requirements
  5. 05MED5% royalty on undisclosed revenues creates earnings opacity and risk of underperforming units unable to cover fees
  6. 06HIGHNo disclosed litigation could mask disputes; absence of transparency raises credibility concerns

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.