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Lower Risk
No litigation cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
80 / 100
FranchiseVerdict composite
Rating
AVOID
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
61
Government-backed loans issued
Default rate
15.7%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
8 loans
Loans charged off or defaulted
Total loan volume
$9.8M
Avg loan size
$161K
Participating lenders
34
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 80/100 rating
Risk Score Breakdown
- 01MINOROnly 2 units operating — indicates either brand collapse, recent launch, or severe underperformance; impossible to validate system viability
- 02MINORNo Item 19 financial disclosure (avg revenue/net income) — prevents ROI validation and suggests franchisor may have poor unit economics to hide
- 03HIGHGoing Concern = False — franchisor may be insolvent or facing liquidation risk; franchisees' support infrastructure at serious risk
- 04MINORHigh franchise fee ($125k) relative to system size — indicates franchisor dependent on franchise fees rather than royalties from healthy operating units
- 05MINORWide investment range ($169k-$578k) with no clarification — suggests inconsistent buildout costs, poor unit standardization, or hidden expenses
- 06MINORRoyalty rate unknown — red flag for transparency; unable to assess ongoing cost burden or franchisor's incentive alignment
- 07MINOR10-year term with only 2 units — territory protection meaningless if system is failing; suggests franchisor cannot attract/retain franchisees
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.