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F79/100FDD 2023

Shilo Inns — Litigation & Risk

Lodging - Hotels & Motels · FDD Items 3, 4 & 5

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Elevated Risk

13 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
13
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
79 / 100
FranchiseVerdict composite
Rating
AVOID
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
2
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$5.9M
Avg loan size
$2.9M
Participating lenders
2

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Not required
You retain the right to sue in court
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
Oregon
State whose law governs disputes — relevant if you're not based there

What drove the 79/100 rating

Risk Score Breakdown

  1. 01HIGHGoing Concern status is FALSE — franchisor may lack financial stability to support franchisees
  2. 02HIGHThirteen disclosed litigations including defaults, commercial loan foreclosures, and pandemic-related failures indicate systemic financial distress
  3. 03MEDExtremely high initial investment ($7.36M+) with no disclosed average revenue or net income — impossible to validate ROI
  4. 04MINOROnly 18 total units with unknown growth trajectory suggests stagnant or shrinking system
  5. 05MINORNo Item 19 financial performance representations — franchisor unwilling or unable to disclose unit economics
  6. 06MINORFounder/entity foreclosures post-2008 and COVID-19 suggest poor crisis management and resilience
  7. 07MED5-7% royalty on undisclosed gross rooms revenue creates uncertainty about actual ongoing costs

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.