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
65 / 100
FranchiseVerdict composite
Rating
MODERATE
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
16
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$10.7M
Avg loan size
$670K
Participating lenders
9
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
Minnesota
State whose law governs disputes — relevant if you're not based there
What drove the 65/100 rating
Risk Score Breakdown
- 01HIGHActive litigation alleging fraud, misrepresentation of sales/earnings, and violations of California Franchise Investment Law — indicates potential systemic disclosure failures
- 02MEDNo Item 19 (Financial Performance Representations) disclosed — unable to verify claimed profitability or validate investment ROI
- 03MINORMinimal unit growth (4.8% YoY on only 22 units) suggests weak franchisee recruitment, retention, or system health
- 04MINORWide investment range ($142.5K–$896K) with no corresponding revenue/profit disclosure creates opacity around actual unit economics
- 05MINORUnprotected territory exposes franchisees to cannibalization and competition from other franchisees and company-owned locations
- 06MINORUnknown royalty structure — unable to calculate true net margins; high upside fees could erode profitability
- 07HIGHGoing Concern = False — potential financial instability at franchisor level raises questions about support, technology, and brand viability
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.