BAbove average58/100FDD 2026
Pip: Litigation & Risk
Business Services · 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)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 58 / 100
- FranchiseVerdict composite · higher is better
- Rating
- B
- A / B / C / D / F verdict grade
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
- CA
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
TeamLogic, LLC (affiliate) entered a Consent Order with California DFPI on January 11, 2024, for selling 4 franchises through brokers without required Salesperson disclosures; paid $8,000 administrative penalty.
What drove the 58/100 verdict
Risk Score Breakdown
- 01MEDUnit count declined 3.8% YoY (50 units total) indicating system contraction and weak franchisee recruitment/retention
- 02MINORNo Item 19 financial performance disclosure means prospective franchisees cannot verify actual profitability claims or ROI potential
- 03HIGHAffiliate litigation (TeamLogic/California) for improper franchise sales practices suggests possible compliance weaknesses across parent company's franchise operations
- 04MINORRoyalty structure ranges from 0.25% to 6.5% with no clarity on triggers or escalation, creating uncertainty about actual cost burden
- 05MINORHigh initial investment ($246,690-$274,190) with 10-year commitment combined with shrinking franchise base increases franchisee financial risk
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.