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B60/100FDD 2025

SalesStar — Litigation & Risk

Education - Tutoring & Test Prep · 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
60 / 100
FranchiseVerdict composite
Rating
MODERATE
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
1 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
Delaware
State whose law governs disputes — relevant if you're not based there

What drove the 60/100 rating

Risk Score Breakdown

  1. 01MEDAverage net income of $170,408 not validated against disclosed gross revenue—Item 19 financial performance representation missing entirely
  2. 02MINORNo territory protection despite $205,500-$241,500 investment and 10% royalty structure creates cannibalization risk with only 7 units
  3. 03MINORExplosive 133.3% YoY unit growth (likely 3→7 units) may indicate unsustainable expansion or inflated projections rather than sustainable franchisee success
  4. 04MINORHigh franchise fee ($125,000) represents 61% of total investment with unproven unit economics and no average revenue disclosure
  5. 05MINOR5-year term is below industry standard (10 years common) with unprotected territory, limiting franchisee ability to build equity

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.