Perkins Restaurant and Bakery: Litigation & Risk
Quick-Service Restaurants · FDD Items 3, 4 & 5
Elevated Risk
4 cases disclosed in FDD Items 3 and 4. Bankruptcy disclosed in Item 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 4
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- Disclosed
- Franchisor or officer bankruptcy
- Verdict score
- 61 / 100
- FranchiseVerdict composite · higher is better
- Rating
- A
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 39
- Government-backed loans issued
- Charge-off rate
- 6.7%
- vs 16% franchise average
- 5-yr charge-off rate
- N/A
- Defaults
- 2 loans
- Loans charged off or defaulted
- Total loan volume
- $28.0M
- Avg loan size
- $717K
- Participating lenders
- 7
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
- GA
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
4 predecessor (PMC) employment/PAGA cases; Norwalt (wrongful termination + PAGA, settled $26K), Ramirez (PAGA wage deductions, settled $7K), Nourani (PAGA off-clock/overtime, no resolution), Cupp (class/PAGA rest breaks, individual arbitration, no resolution). All relate to predecessor franchisor Perkins & Marie Callender's LLC.
What drove the 61/100 verdict
Risk Score Breakdown
- 01MINORDeclining unit count (-4.4% YoY) indicates system contraction and potential franchisee struggles
- 02MINORNo Item 19 (Net Income) disclosure prevents assessment of actual profitability despite $1.99M average revenue
- 03HIGHMaterial employment litigation against predecessor franchisor (PMC) involving wage/hour violations and PAGA claims signals potential operational/compliance risks
- 04MINORHigh investment range ($579K-$3.58M) with 4% royalty requires substantial revenue to achieve acceptable returns
- 05MINOR20-year term is lengthy commitment for declining franchise with unproven current profitability metrics
- 06HIGHSuccessor franchisor liability exposure unclear given litigation tied to predecessor operations
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.