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B59/100FDD 2025

Real Producers — Litigation & Risk

Real Estate · FDD Items 3, 4 & 5

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Moderate — Review

2 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
59 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID

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

What drove the 59/100 rating

Risk Score Breakdown

  1. 01MINORNo average revenue or net income disclosure (Item 19) prevents realistic ROI assessment
  2. 02HIGHRegulatory litigation involving affiliate for illegal franchise sales in two states signals compliance issues within corporate structure
  3. 03MINOR20% royalty on advertising value is unusual metric—difficult to audit and creates earnings ambiguity vs. standard % of gross revenue
  4. 04MINOROnly 14.3% YoY unit growth with 153 total units suggests flat/stagnating system
  5. 05MINORNo protected territory creates direct competition risk between franchisees within same market
  6. 06MINORLow franchise fee ($735) relative to total investment range ($1,925-$11,910) indicates unclear cost breakdown and potential hidden expenses
  7. 07MINORShort 3-year term with no renewal protections limits franchisee security and recoupment window

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.