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Elevated Risk
18 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
18
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
47
Government-backed loans issued
Default rate
11.5%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
3 loans
Loans charged off or defaulted
Total loan volume
$16.1M
Avg loan size
$343K
Participating lenders
20
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
Virginia
State whose law governs disputes — relevant if you're not based there
What drove the 75/100 rating
Risk Score Breakdown
- 01MINORSevere unit contraction of -24.6% YoY (49 units down from ~65) indicates systemic franchisee failure or dissatisfaction
- 02MEDMultiple regulatory consent orders across 4 states (CA, MD, WA, VA) for FDD misrepresentations and omissions—suggests deliberate disclosure failures
- 03HIGHLitigation involving fraud and breach of contract allegations against franchisor management—indicates trust and governance issues
- 04MINORNo Item 19 net income disclosure despite $325K avg revenue—unable to validate actual profitability claims
- 05HIGHGoing concern status combined with unit decline raises sustainability questions about franchisor viability
- 06MINORHigh royalty floor ($345/week minimum = $17,940/year) on low-margin fitness model creates cash flow pressure
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.