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D77/100FDD 2025

Pizza Factory — Litigation & Risk

Food & Beverage - Pizza · FDD Items 3, 4 & 5

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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
77 / 100
FranchiseVerdict composite
Rating
CAUTION
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
39
Government-backed loans issued
Default rate
26.7%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
8 loans
Loans charged off or defaulted
Total loan volume
$7.0M
Avg loan size
$179K
Participating lenders
24

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
3 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
California
State whose law governs disputes — relevant if you're not based there

What drove the 77/100 rating

Risk Score Breakdown

  1. 01HIGHLitigation history: 2019 breach of contract lawsuit with fraud/misrepresentation allegations settled for $65,000 in 2021 raises concerns about franchisor business practices and relationship management
  2. 02MINORSlow unit growth: 6.8% YoY growth is modest for a pizza franchise and suggests difficulty recruiting/retaining franchisees or market saturation
  3. 03MINORNo Item 19 financial disclosure: Franchisor does not provide average unit volume data to prospective franchisees, limiting transparency on revenue claims
  4. 04MINORWide investment range: $318,000-$740,000 spread (133% variance) suggests highly variable startup costs and unclear requirements for different unit types
  5. 05MINORNet income margin concern: $214,430 net income on $916,995 revenue (23.4% margin) needs verification—validate if this is representative and how 5% royalty impacts bottom line

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.