![Sandbox VR logo](https://cdn.brandfetch.io/sandboxvr.com/w/128/h/128/fallback/lettermark?c=<img src="https://cdn.brandfetch.io/domain/apple.com?c=1idsvcTjLv919Ax0E2s" alt="Logo by Brandfetch" />){kind=small}
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
61 / 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
8
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$10.1M
Avg loan size
$1.3M
Participating lenders
5
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
Delaware
State whose law governs disputes — relevant if you're not based there
What drove the 61/100 rating
Risk Score Breakdown
- 01HIGHRecent material litigation with Canadian franchisees settled July 2024, indicating franchise relationship strain and potential operational/support issues
- 02MINORNo protected territory despite high initial investment ($250K-$1.9M), creating direct competition risk from other franchisees or company-owned locations
- 03MINORRoyalty structure heavily favors franchisor ($1,000/month minimum per Holodeck regardless of revenue), creating cash flow pressure during slow periods
- 04MINORRapid 50% YoY unit growth (18→36 units in one year) raises sustainability questions and may indicate market saturation or aggressive recruitment over franchisee success
- 05MEDWide investment range ($250K-$1.9M) with limited clarity on what drives 7.5x variance, suggesting inconsistent site requirements or hidden costs
- 06MINORNo Item 19 financial performance representations provided; average net income of $688,829 is unverified and may not reflect typical franchisee experience
- 07MINORHigh capital intensity (VR equipment) creates technology obsolescence risk and difficulty recouping investment if business underperforms
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.