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
75 / 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
18
Government-backed loans issued
Default rate
20.0%
vs <3% typical · system-wide
5-yr default rate
20.0%
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$6.7M
Avg loan size
$373K
Participating lenders
11
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
No
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
North Carolina
State whose law governs disputes — relevant if you're not based there
What drove the 75/100 rating
Risk Score Breakdown
- 01MEDNo average revenue or net income disclosed in FDD (Item 19 missing) — impossible to validate ROI claims or break-even timeline
- 02MINORExplosive unit growth of 178.9% YoY suggests either aggressive expansion or system instability — unsustainable growth often precedes contraction
- 03MINORHigh initial investment ($227K-$496K) combined with 8% royalty creates significant fixed costs with no proven unit economics
- 04HIGHGoing Concern flagged as 'False' — ambiguous disclosure suggests potential financial or operational stress at franchisor level
- 05MED169 units is still relatively small system — limited track record and higher franchisor dependency risk
- 06MINORProtected territory is positive, but without revenue data, territory value cannot be assessed
- 07MINORRoyalty structure (8% of gross weekly revenues) provides no incentive alignment if franchisee is unprofitable
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.