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AStrongest tier81/100FDD 2025

Shipley Do-Nuts: Litigation & Risk

Retail · FDD Items 3, 4 & 5

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Elevated Risk

9 cases disclosed in FDD Items 3 and 4. Bankruptcy disclosed in Item 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
9
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
Disclosed
Franchisor or officer bankruptcy
Verdict score
81 / 100
FranchiseVerdict composite · higher is better
Rating
A
A / B / C / D / F verdict grade

7(a) FOIA data · FY2020–present

SBA Loan Performance

Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.

Total 7(a) loans
27
Government-backed loans issued
Charge-off rate
0.0%
vs 16% franchise average
5-yr charge-off rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$18.0M
Avg loan size
$666K
Participating lenders
19

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
Texas
State whose law governs disputes. Relevant if you're not based there

Extracted from FDD Item 3

Litigation Detail

Shipley Franchise Company LLC and Shipley Do-Nut Flour and Supply Co LLC are involved in 4 pending litigation cases against former franchisees. Cases involve claims of trademark infringement, unfair competition, deceptive trade practices violations, and breach of contract. All defendants have filed counterclaims alleging wrongful termination and violations of the Arkansas Franchise Practices Act. Defendant counterclaims in 3 cases (Sonny Ros, Botny Heang, Llina Lab) have been dismissed by the Court. One case (Jeffrey Ek) is stayed due to defendant's Chapter 7 bankruptcy filing. Discovery is ongoing in active cases. Attorney fees of $7,607.80 were awarded in one case.

What drove the 81/100 verdict

Risk Score Breakdown

  1. 01HIGH7 litigation matters (franchisor mostly plaintiff)
  2. 02MINORStrong financials: net worth $91.3M, net income $2.27M
  3. 03MINOR366 units (suits proportionate to size)
  4. 04MEDItem 19 disclosed, no going-concern

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.