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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
10
Government-backed loans issued
Default rate
44.4%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
4 loans
Loans charged off or defaulted
Total loan volume
$3.3M
Avg loan size
$333K
Participating lenders
7
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
State in which Business is located
State whose law governs disputes — relevant if you're not based there
What drove the 84/100 rating
Risk Score Breakdown
- 01MINORUnit count declining 12.7% YoY (124 units) indicates contracting franchise system with potential sustainability issues
- 02MEDNo Item 19 financial performance disclosure (Avg Revenue and Net Income not disclosed) prevents realistic ROI assessment and suggests weak performance data
- 03HIGHHigh-profile litigation (2016 breach of master license agreement and trademark infringement) signals operational/legal complexity despite 2018 settlement
- 04MINORUnprotected territory creates direct competition risk between franchisees within same market
- 05MINORWide investment range ($18.6K–$195K) with unclear cost drivers and no transparent average unit economics
- 06MINORRoyalty structure ($74/rep minimum) may incentivize under-reporting of sales representatives or create accounting disputes
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.