FranchiseVerdict
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D75/100FDD 2025

Rose Tea Lounge™ — Litigation & Risk

Food & Beverage - Coffee & Tea · 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
75 / 100
FranchiseVerdict composite
Rating
CAUTION
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
California
State whose law governs disputes — relevant if you're not based there

What drove the 75/100 rating

Risk Score Breakdown

  1. 01HIGHGoing Concern status = False indicates serious financial viability questions about the franchisor
  2. 02MINOROnly 4 units systemwide suggests minimal brand traction, market validation failure, or recent contraction
  3. 03MEDNo Item 19 financial disclosure (Avg Revenue & Net Income not disclosed) prevents ROI analysis and suggests weak unit economics
  4. 04MINORHigh initial investment ($276k-$405k) with unproven returns creates significant capital-at-risk exposure
  5. 05MINORTiny franchise system (4 units) offers minimal peer support network and suggests franchisor may lack operational infrastructure
  6. 06MINORUnknown growth trajectory with stagnant unit count indicates lack of franchisee demand or failed recruitment efforts

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.