FranchiseVerdict
Qahwah House™ logo
B55/100FDD 2025

Qahwah House™ — Litigation & Risk

Food & Beverage - Coffee & Tea · FDD Items 3, 4 & 5

Back to overview

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
55 / 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
1
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$550K
Avg loan size
$550K
Participating lenders
1

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

What drove the 55/100 rating

Risk Score Breakdown

  1. 01HIGHGoing Concern status is FALSE — indicates franchisor financial distress or structural issues
  2. 02MEDNet Income not disclosed in FDD Item 19 — impossible to validate profitability claims or ROI
  3. 03MEDHigh initial investment ($572.8K–$939.4K) with no disclosed profit data creates unfunded risk
  4. 04MINOR100% YoY unit growth (22 units) is suspiciously perfect — suggests either cherry-picked data or unreliable reporting
  5. 05MINOR6% royalty on $1.28M average revenue equals $76.8K annual franchisor fees — questions sustainability if units underperform
  6. 06MEDOnly 22 franchise units is a small system — limited peer support and higher franchisor dependency on each unit's success

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.