A38/100FDD 2024
Pet Supplies Plus — Litigation & Risk
Personal Services - Pet Care · FDD Items 3, 4 & 5
Moderate — Review
3 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
3
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
38 / 100
FranchiseVerdict composite
Rating
STRONG
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
198
Government-backed loans issued
Default rate
4.3%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
3 loans
Loans charged off or defaulted
Total loan volume
$169.1M
Avg loan size
$854K
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
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
Michigan
State whose law governs disputes — relevant if you're not based there
What drove the 38/100 rating
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.