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B55/100FDD 2025

Square Cow — Litigation & Risk

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
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
4
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

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
Texas
State whose law governs disputes — relevant if you're not based there

What drove the 55/100 rating

Risk Score Breakdown

  1. 01HIGHGoing Concern warning indicates franchisor financial distress despite positive unit-level economics
  2. 02MINORExplosive 200% YoY unit growth (9 units) suggests rapid expansion with unproven sustainability and possible quality control issues
  3. 03MINORHigh franchise fee ($59,500) plus $167k-$233k total investment creates significant financial barrier relative to only 9 operating units for validation
  4. 04MEDNo Item 19 (Earnings Claims) disclosed — cannot independently verify the $1.8M average revenue and $395k net income figures across system
  5. 05MINOR7% royalty on gross sales (not net) is aggressive and reduces franchisee flexibility during downturns
  6. 06MINORExtremely small sample size (9 units) makes financial projections unreliable and vulnerable to outlier performance skewing averages

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.