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F93/100FDD 2020

Reef Health — Litigation & Risk

Health & Wellness - Other · FDD Items 3, 4 & 5

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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
93 / 100
FranchiseVerdict composite
Rating
AVOID
STRONG / MODERATE / CAUTION / AVOID

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Not required
You retain the right to sue in court
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
Arizona
State whose law governs disputes — relevant if you're not based there

What drove the 93/100 rating

Risk Score Breakdown

  1. 01MINORZero franchised units operating despite established system—indicates failed or pre-launch franchise model with no proof of concept
  2. 02MEDNo average revenue or net income disclosure (missing Item 19)—impossible to assess ROI or validate $53k-$57k investment viability
  3. 03MINOR0% royalty structure suggests franchisor generates revenue only from initial $49,500 franchise fee with no ongoing stake in franchisee success
  4. 04HIGHGoing Concern status is FALSE—franchisor may lack financial stability or operational viability
  5. 05MINORUnprotected territory combined with zero existing franchises means no competitive barriers and unproven market demand
  6. 06MINOR5-year term is short and provides minimal runway to recoup initial investment before renewal uncertainty
  7. 07HIGHNo disclosed litigation but zero operating units make litigation history irrelevant; no track record of franchisee 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.