FranchiseVerdict
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A44/100FDD 2025

Penn Station East Coast Subs — Litigation & Risk

Food & Beverage - Full Service · 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
44 / 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
14
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
Total loan volume
$9.9M
Avg loan size
$706K
Participating lenders
10

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Not required
You retain the right to sue in court
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
Ohio
State whose law governs disputes — relevant if you're not based there

What drove the 44/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-0.3% YoY on 322 units) suggests stagnant or contracting system growth
  2. 02MINORWide royalty range (0-8%) creates unpredictable cost structure; unclear how many units hit 8% tier vs. benefit from abatement
  3. 03MINORNet income of $117,415 on $816,785 revenue (14.4% margin) is modest for QSR; leaves little buffer for economic downturns or underperformance
  4. 04HIGHNo disclosed litigation is positive, but absence of Item 19 financial data limits ability to validate average unit volumes and profitability claims
  5. 05MINORHigh initial investment ($473K–$765K) paired with modest average net income creates extended payback period risk

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.