A42/100FDD 2025
School of Rock — Litigation & Risk
Education - Tutoring & Test Prep · FDD Items 3, 4 & 5
Moderate — Review
4 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
4
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
42 / 100
FranchiseVerdict composite
Rating
STRONG
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
104
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$37.8M
Avg loan size
$364K
Participating lenders
34
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
Massachusetts
State whose law governs disputes — relevant if you're not based there
What drove the 42/100 rating
Risk Score Breakdown
- 01MINORAbsence of Item 19 (Financial Performance Representations) limits ability to validate claimed average revenue of $672,488 and net income of $207,093
- 02MINORModerate unit growth of 8.5% YoY is slower than healthy franchise systems; questions sustainability of expansion claims
- 03HIGHParent company litigation (landlord/tenant dispute) and affiliate settlements involving 'no-poaching' and cybersecurity suggest corporate governance and operational security weaknesses
- 04MEDHigh initial investment ($425k-$705k) paired with 8% royalty creates significant breakeven threshold; limited margin for underperformance
- 05MINORProtected territory is positive, but combined with lack of financial disclosure, territory boundaries and enforcement mechanisms are unverified
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.