B65/100FDD 2025
Sauna House — Litigation & Risk
Health & Wellness - Other · FDD Items 3, 4 & 5
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
65 / 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
3
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
$7.9M
Avg loan size
$2.6M
Participating lenders
2
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 Carolina
State whose law governs disputes — relevant if you're not based there
What drove the 65/100 rating
Risk Score Breakdown
- 01MINOROnly 3 units in system with unknown growth trajectory suggests minimal scale and unproven replicability
- 02MINORNo territory protection creates direct competition risk from other franchisees or corporate expansion
- 03MINORHigh capital requirement ($1.56M–$3.84M) with modest average net income ($293,745) yields 7–19% ROI — below market expectations for this investment tier
- 04MINORSignificant gap between gross revenue ($1,357,050) and net income ($293,745) indicates 78% cost structure, raising sustainability questions
- 05MINOR7% royalty on gross sales (not net) penalizes profitability and assumes consistent revenue without protection
- 06HIGHUndisclosed litigation status and lack of Item 19 financials in FDD limits due diligence confidence
- 07MINORExtremely small franchisee base (3 units) provides almost no performance validation or peer support network
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.