FranchiseVerdict
Sculpture Hospitality logo
B63/100FDD 2025

Sculpture Hospitality — Litigation & Risk

Business Services - Other · FDD Items 3, 4 & 5

Back to overview

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
63 / 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
6
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
$1.4M
Avg loan size
$233K
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
Ontario, Canada
State whose law governs disputes — relevant if you're not based there

What drove the 63/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining (-1.1% YoY) suggests system contraction and potential market saturation or franchisee dissatisfaction
  2. 02MINORNo Item 19 (average revenue/net income disclosure) prevents assessment of actual profitability and ROI on $45.5k-$64.5k investment
  3. 03HIGHLitigation history including breach of contract settlement ($126,123) and regulatory consent order for improper franchise sales registration indicates legal/compliance issues
  4. 04MEDHigh 8% royalty on undisclosed revenue base creates opacity around true take-home income for franchisees
  5. 05MINORShort 3-year term limits long-term planning and creates renewal uncertainty; high renewal failure risk typical in short-term agreements
  6. 06MINORFranchise fee ($40,000) represents 62-88% of total investment, leaving minimal working capital for startup operations

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.