FranchiseVerdict
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A53/100FDD 2023

Smile Source — Litigation & Risk

Health & Wellness - Other · 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
53 / 100
FranchiseVerdict composite
Rating
STRONG
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
1
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
$541K
Avg loan size
$541K
Participating lenders
0

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
3 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 53/100 rating

Risk Score Breakdown

  1. 01MEDNo average revenue or net income disclosed (Item 19) — impossible to validate ROI or unit economics
  2. 02MINORUnprotected territory creates direct competition risk; no exclusivity guarantee
  3. 03MINORWide investment range ($5,800–$435,000) suggests inconsistent model; unclear what drives cost variance
  4. 04MINORModest 6.1% YoY growth with 663 units is below industry standards; growth trajectory unclear
  5. 05MINORRoyalty rate increase (1.45% → 1.50%) announced July 2023 signals margin pressure on franchisees
  6. 06MINOR5-year term is shorter than industry standard (10 years typical); renewal risk and instability

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.