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Moderate — Review
4 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
4
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
65 / 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
163
Government-backed loans issued
Default rate
13.0%
vs <3% typical · system-wide
5-yr default rate
10.5%
Defaults
14 loans
Loans charged off or defaulted
Total loan volume
$265.3M
Avg loan size
$1.6M
Participating lenders
58
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
Missouri
State whose law governs disputes — relevant if you're not based there
What drove the 65/100 rating
Risk Score Breakdown
- 01HIGHMultiple litigation matters including IP infringement, member disputes with fiduciary duty claims, unfair competition arbitration, and regulatory consent order suggest governance and compliance issues
- 02MINORSlow unit growth of 6.8% YoY with 193 units indicates market saturation or franchisee performance challenges in a maturing system
- 03MINORHigh initial investment range ($2.18M–$4.72M) against average net income of $836K yields 2.5–4.7 year payback with significant capital at risk
- 04MEDMissing Item 19 financial performance representations limits ability to validate disclosed average revenue and net income figures across actual franchisee cohorts
- 05HIGHLitigation pattern suggests internal conflicts between franchisor and franchisees, affiliate entities, and management—indicating potential operational friction
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.