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A36/100FDD 2024

Spherion — Litigation & Risk

Business Services - Staffing · FDD Items 3, 4 & 5

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Moderate — Review

2 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
36 / 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
5
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$14.5M
Avg loan size
$2.9M
Participating lenders
5

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Not required
You retain the right to sue in court
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
Georgia
State whose law governs disputes — relevant if you're not based there

What drove the 36/100 rating

Risk Score Breakdown

  1. 01MINOR25% royalty on temporary gross profits is exceptionally high and creates ambiguity around actual net profitability
  2. 02MINORSystem declining 2.8% YoY with only 211 units suggests market saturation or operational challenges
  3. 03MEDNet income not disclosed in FDD Item 19 prevents accurate ROI assessment on $214K-$343K investment
  4. 04MINORUnprotected territory creates direct competition risk from other Spherion franchisees in same market
  5. 05HIGHActive litigation involving franchisee fraud allegations and prior breach settlement indicate franchisor-franchisee relationship strain
  6. 06MINORHigh initial investment ($40K franchise fee + $214K-$343K total) combined with 25% royalty leaves thin margins on staffing agency model

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.