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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
59 / 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
9
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$2.9M
Avg loan size
$317K
Participating lenders
8
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
Colorado
State whose law governs disputes — relevant if you're not based there
What drove the 59/100 rating
Risk Score Breakdown
- 01MINORNo average revenue or net income disclosure (Item 19) — impossible to assess profitability or ROI on $197k-$484k investment
- 02HIGHGoing concern status is 'False' — suggests franchisor may have financial/operational instability or undisclosed liabilities
- 03MINORRoyalty structure with flat fee floor creates unpredictability — franchisees may pay 5% OR higher flat fee regardless of sales performance
- 04MEDRapid unit growth (35% YoY) without disclosed unit economics raises sustainability questions — growth may mask poor unit-level profitability
- 05HIGHNo litigation disclosed but Going Concern = False — potential red flag indicating franchisor distress not yet litigated
- 06MINORProtected territory alone insufficient to offset lack of financial transparency and franchisor stability concerns
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.