B58/100FDD 2025
Phenix Salon Suites® — Litigation & Risk
Personal Services - Beauty & Salon · FDD Items 3, 4 & 5
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
58 / 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
3
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$2.1M
Avg loan size
$711K
Participating lenders
3
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
Colorado
State whose law governs disputes — relevant if you're not based there
What drove the 58/100 rating
Risk Score Breakdown
- 01MINORSlow unit growth of only 3.1% YoY suggests market saturation or retention challenges in a 399-unit system
- 02HIGH2019 litigation regarding illegal 'no-poach' provisions indicates compliance and legal risk exposure
- 03MINORNo Item 19 financial performance representations limits ability to validate the $157,259 average net income claim
- 04MINORHigh initial investment range ($721K-$1.42M) against modest average net income ($157K) implies 4.6-9 year payback period
- 05MINORFixed royalty structure ($0.34/sq ft) may be unprofitable for smaller locations or during revenue downturns
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.