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B63/100FDD 2025

Salon Professional Education Company (SPEC) — Litigation & Risk

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

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Moderate — Review

2 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
63 / 100
FranchiseVerdict composite
Rating
MODERATE
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

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

What drove the 63/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-5.6% YoY) signals system contraction and potential market saturation or franchisee dissatisfaction
  2. 02MEDNet income not disclosed in Item 19 prevents accurate ROI analysis; only gross revenue ($1.875M avg) provided without profitability metrics
  3. 03HIGHRecent litigation history (2021 breach of contract suit; 2013 Washington consent order for unregistered sale) indicates compliance and relationship management issues
  4. 04MEDHigh initial investment range ($581.8K–$2.0M+) relative to undisclosed net income creates significant downside risk without clear profit visibility
  5. 05MINORLong 15-year term locks franchisees into relationship with declining system and franchisor with regulatory history
  6. 06MINOR6% royalty on gross revenues is extractive if net margins are thin, particularly in education sector with competitive 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.