B65/100FDD 2025
San Chen — Litigation & Risk
Food & Beverage - Coffee & Tea · FDD Items 3, 4 & 5
Moderate — Review
1 case disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
65 / 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
California
State whose law governs disputes — relevant if you're not based there
What drove the 65/100 rating
Risk Score Breakdown
- 01HIGHRecent litigation (January 2022 Consent Order) indicates regulatory compliance failures and disclosure violations in FDD filings
- 02MEDOnly 7 units across entire system suggests extremely limited scale, making support infrastructure and buying power questionable
- 03MEDNo disclosed average revenue or net income data prevents ability to assess ROI on $155,500–$249,460 investment
- 04MINORShort 3.5-year franchise term creates instability and limits ability to recoup investment and build equity
- 05MINORNo growth trajectory provided for 7-unit system raises concerns about franchisee demand and brand expansion viability
- 06MED6% royalty on undisclosed revenues creates uncertainty around actual take-home profitability
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.