FranchiseVerdict
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D72/100FDD 2026

Perko’s Café Grill — Litigation & Risk

Food & Beverage - Full Service · FDD Items 3, 4 & 5

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Moderate — Review

1 case disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
72 / 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 72/100 rating

Risk Score Breakdown

  1. 01MEDOnly 6 units system-wide indicates minimal scale, limited support infrastructure, and high failure risk
  2. 02HIGHGoing Concern = False signals potential insolvency or serious financial distress at franchisor level
  3. 03HIGHActive litigation (Chavez vs. Heritage Restaurant Brands) alleging California labor code violations creates legal liability and regulatory exposure
  4. 04MEDNo disclosed average revenue or net income (missing Item 19) prevents realistic ROI analysis and suggests poor unit economics
  5. 05MINORWide investment range ($383.7K–$1.52M) with no transparency on what drives 300%+ variance
  6. 06MINOR6% royalty on gross revenue (not net) is aggressive for a micro-franchise with minimal brand recognition
  7. 07MINOROnly 6 units makes territorial protection meaningless and raises sustainability questions

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.