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Elevated Risk
6 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
6
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
73 / 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
2
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
$36K
Avg loan size
$18K
Participating lenders
1
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
Texas
State whose law governs disputes — relevant if you're not based there
What drove the 73/100 rating
Risk Score Breakdown
- 01MEDSignificant unit decline of 11.7% YoY (588 units) indicates system contraction and franchisee satisfaction issues
- 02HIGHMultiple active state litigation across 6 states for alleged franchise law violations and inadequate disclosures
- 03MEDNo average revenue or net income disclosed (Item 19 missing) — impossible to validate ROI claims
- 04HIGHGoing Concern status is False — suggests potential franchisor financial instability or operational distress
- 05MINORExtremely low franchise fee ($1,000) combined with vague royalty structure ($1,000 annual minimum 'purchase') raises questions about franchisor revenue model and commitment
- 06MINOR1-year term is unusually short and creates instability for franchisee business planning
- 07MINORActive regulatory proceedings indicate franchisor may have operated without proper franchise registration in multiple states
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.