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Moderate — Review
2 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
55 / 100
FranchiseVerdict composite
Rating
MODERATE
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
7
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$1.1M
Avg loan size
$152K
Participating lenders
4
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
Minnesota
State whose law governs disputes — relevant if you're not based there
What drove the 55/100 rating
Risk Score Breakdown
- 01HIGHActive litigation with pending motion to reconsider and anticipated refiling creates ongoing legal/liability exposure and potential for franchisor assessment/indemnification claims
- 02MEDNet income not disclosed in Item 19 prevents ROI validation; $468,825 average revenue against $114,645-$281,196 investment leaves unclear profit margins after 8-10% royalties
- 03MEDSmall unit count (21 locations) with unknown growth trajectory suggests limited system maturity and scalability; no disclosure of unit growth rate raises sustainability questions
- 04MINORHigh per-unit liability risk in party/alcohol-adjacent business model creates insurance cost uncertainty and franchisee personal liability exposure
- 05MEDFranchise fee ($39,900) represents 34-35% of minimum investment with no disclosed profitability metrics to justify early payback
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.