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D72/100FDD 2025

Smart Drinks — Litigation & Risk

Food & Beverage - Juice & Smoothies · 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
72 / 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
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$254K
Avg loan size
$127K
Participating lenders
2

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 72/100 rating

Risk Score Breakdown

  1. 01MEDSystem contracting sharply: 25% unit decline year-over-year (7 units remaining) indicates accelerating franchisee exits
  2. 02MINORNo Item 19 financial disclosure: Average revenue of $240,744 appears healthy but net income completely hidden—likely masking poor profitability
  3. 03HIGHGoing Concern status: False flag suggests franchisor may have disclosed material uncertainty about business viability to regulators
  4. 04MINORZero territory protection: Franchisees face cannibalization risk and no defensible market position despite $45,000 franchise fee
  5. 05MINORWeak ROI visibility: $9,600 annual royalties on ~$240K revenue (4% rate) is reasonable, but without net income data, true payback period is unknowable
  6. 06MINORTiny, shrinking network: 7 units means minimal brand recognition, supply chain leverage, or peer support—franchise system appears to be failing

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.