B65/100FDD 2025
Pepper Lunch — Litigation & Risk
Food & Beverage - Full Service · 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
65 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID
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
Not waived
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 65/100 rating
Risk Score Breakdown
- 01MEDUnit count declined 16.7% YoY (5 units) indicating system contraction and potential viability concerns
- 02MEDNet income not disclosed in FDD Item 19 — impossible to assess actual profitability despite $1.6M average revenue
- 03MINORHigh investment-to-revenue ratio (41-104% of initial investment recovered annually) creates extended breakeven period
- 04MINORSmall franchisee base (5 units) limits peer support network and suggests brand scaling challenges
- 05HIGHGoing Concern statement is 'False' — unusual phrasing that may indicate accounting or structural issues worth clarifying
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.