D70/100FDD 2025
Pekoe Tea Bar — Litigation & Risk
Food & Beverage - Coffee & Tea · FDD Items 3, 4 & 5
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
70 / 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 70/100 rating
Risk Score Breakdown
- 01HIGHGoing concern warning indicates financial instability or viability questions at corporate level
- 02MEDOnly 5 units systemwide suggests extremely limited scale, unproven business model, and high failure risk
- 03MINORNo Item 19 (average revenue/net income) disclosure prevents ROI validation and hides performance data
- 04MINORHigh investment range ($496k-$855k) paired with no revenue disclosure creates severe information asymmetry
- 05MEDNo disclosed unit growth trajectory raises questions about brand momentum and franchisee recruitment
- 06MINOREarly-stage franchisor with minimal operating history likely lacks operational infrastructure and support systems
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.