B55/100FDD 2025
Sola Salon Studios — Litigation & Risk
Personal Services - Beauty & Salon · FDD Items 3, 4 & 5
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
55 / 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
13
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
$10.5M
Avg loan size
$811K
Participating lenders
7
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 55/100 rating
Risk Score Breakdown
- 01MINORNo Item 19 (net income) disclosure limits ability to validate $442K avg revenue translates to acceptable profit margins after $500/mo minimum royalty + operating costs
- 02MINORSlow unit growth of 4.6% YoY in mature salon/spa sector suggests market saturation or franchisee satisfaction issues
- 03MINORHigh initial investment ($1.18M–$1.94M) with 10-year term creates significant capital lock-up and break-even pressure
- 04MINORRoyalty structure ($500/mo minimum) may be problematic for underperforming locations, creating cash flow strain even at low revenue periods
- 05MINORIndependent contractor model (studio rental model) shifts employment/compliance liability to franchisee, creating legal and operational complexity
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.