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D75/100FDD 2025

Schooley Mitchell® — Litigation & Risk

Business Services - 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
75 / 100
FranchiseVerdict composite
Rating
CAUTION
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
56
Government-backed loans issued
Default rate
40.0%
vs <3% typical · system-wide
5-yr default rate
16.7%
Defaults
8 loans
Loans charged off or defaulted
Total loan volume
$7.4M
Avg loan size
$132K
Participating lenders
10

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 75/100 rating

Risk Score Breakdown

  1. 01HIGHGoing Concern status is False — indicates potential financial viability issues at corporate level
  2. 02MEDNo Average Net Income disclosed — inability to validate ROI claims or profitability benchmarks
  3. 03HIGHTwo separate regulatory/litigation cases involving misrepresentation and disclosure violations — compliance risk pattern
  4. 04MINORUnprotected territory — direct competition possible from other franchisees in same market
  5. 05MINORHigh initial investment ($73K-$262K) relative to average revenue ($223.5K) creates tight margin for error
  6. 06MINOR8% royalty on gross sales is structurally problematic if net margins are compressed

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.