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D72/100FDD 2025

Safeguard — Litigation & Risk

Other · FDD Items 3, 4 & 5

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Moderate — Review

5 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
5
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
72 / 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
1
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$800K
Avg loan size
$800K
Participating lenders
0

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

What drove the 72/100 rating

Risk Score Breakdown

  1. 01HIGHGoing concern status is FALSE — indicates potential financial instability or restructuring risk
  2. 02MEDNo revenue or net income disclosure (missing Item 19) — impossible to validate ROI claims or unit economics
  3. 03HIGHLitigation involving affiliate entity (Safeguard Business Systems) with multiple serious allegations including breach of contract, commission disputes, and unfair pricing/sourcing requirements — suggests systemic operational issues
  4. 04MINOR45 units with unknown growth trajectory — stagnant or declining unit count typical of struggling systems
  5. 05MINORNo territory protection — franchisees face direct competition from other franchisees and company
  6. 06MINORExtremely wide investment range ($11,080–$65,130) suggests inconsistent startup costs and unclear business model
  7. 07MINORZero royalty structure is unusual and may indicate weak franchisor support or cash flow problems
  8. 08MINORLow franchise fee ($1,500) combined with no royalties suggests franchisor generates minimal recurring revenue to support franchisees

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.