Pet Supplies Plus: Litigation & Risk
Pet Services · FDD Items 3, 4 & 5
Moderate: Review
3 cases disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 3
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 85 / 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
- 233
- Government-backed loans issued
- Charge-off rate
- 6.8%
- vs 16% franchise average
- 5-yr charge-off rate
- 0.0%
- Defaults
- 5 loans
- Loans charged off or defaulted
- Total loan volume
- $191.7M
- Avg loan size
- $823K
- Participating lenders
- 56
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
- MI
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Three affiliate litigation matters involving Buddy's Franchising and Licensing LLC: two cross-arbitrations with former franchisee MMS Group/Joseph Gazzo over breach of franchise agreement, Lanham Act, Defend Trade Secrets Act (in settlement negotiations); one FTC consent order (2020) regarding antitrust compliance for rent-to-own operators. No direct PSP Franchising LLC litigation disclosed.
What drove the 85/100 verdict
Risk Score Breakdown
- 01HIGHLitigation involving affiliate (Buddy's) regarding franchise agreements and unfair competition raises questions about corporate governance and potential systemic franchise agreement issues
- 02MINORFTC settlement with Buddy's Newco regarding reciprocal purchase agreements suggests franchisor may have imposed unfavorable supplier relationships or tied purchasing arrangements
- 03MINORNet income of $164,676 on $2.6M average revenue (6.3% net margin) is thin—high operating costs relative to gross sales limit franchisee profitability cushion
- 04MINORRoyalty structure escalates from 2% to 3% after year one, reducing already-modest net margins in years 2-10 when many franchisees struggle past break-even
- 05MINORNo Item 19 financial performance representation limits ability to validate whether average revenue/income figures are actually achievable for new franchisees
- 06MINOR13.1% YoY unit growth is modest for a 719-unit system; suggests market saturation or competitive pressure in pet retail sector
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.