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
84 / 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
44
Government-backed loans issued
Default rate
20.8%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
5 loans
Loans charged off or defaulted
Total loan volume
$7.0M
Avg loan size
$158K
Participating lenders
22
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
1 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 84/100 rating
Risk Score Breakdown
- 01MEDZero disclosed units with unknown growth trajectory indicates system contraction or non-existent franchise network
- 02HIGHActive litigation (October 2024) involving breach of contract and trade secret misappropriation suggests operational or contractual disputes
- 03MEDNo average revenue or net income disclosure (missing Item 19) prevents validation of franchise profitability claims
- 04MINORUnusual royalty structure (50% of sub-franchisee fees) is non-standard and creates opaque revenue dependency on Development Area franchisees
- 05MINORHigh franchise fee ($75,000) relative to unknown earning potential creates disproportionate investment risk
- 06MINOR5-year term is shorter than industry standard, suggesting franchisor unwilling to commit long-term
- 07HIGHGoing concern status 'False' raises questions about franchisor financial stability and sustainability
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.