FranchiseVerdict
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F80/100FDD 2025

Shabu All Day — Litigation & Risk

Food & Beverage - Full Service · FDD Items 3, 4 & 5

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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
80 / 100
FranchiseVerdict composite
Rating
AVOID
STRONG / MODERATE / CAUTION / AVOID

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
California
State whose law governs disputes — relevant if you're not based there

What drove the 80/100 rating

Risk Score Breakdown

  1. 01HIGHGoing concern warning indicates financial instability or operational distress at franchisor level
  2. 02MEDZero disclosed operating units suggests new/failed concept with no proven business model or franchisee success data
  3. 03MEDNo average revenue or net income disclosure (missing Item 19) prevents ROI validation and earnings verification
  4. 04MINORHigh initial investment ($455k-$702.5k) with no financial performance benchmarks creates unjustifiable risk
  5. 05MINORUnprotected territory eliminates competitive moat and allows franchisor to saturate market with nearby units
  6. 06MEDNo disclosed unit growth or system size raises questions about franchisee demand and brand viability
  7. 07MINOR5-year term is relatively short, limiting franchisee ability to recoup investment and build equity

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.