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A44/100FDD 2025

Steak n Shake By Biglari — Litigation & Risk

Food & Beverage - Full Service · FDD Items 3, 4 & 5

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Elevated Risk

7 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
7
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
44 / 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
12
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
$13.4M
Avg loan size
$1.1M
Participating lenders
10

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

What drove the 44/100 rating

Risk Score Breakdown

  1. 01MEDSystem contracting sharply (-8.9% YoY unit decline) signals franchisee dissatisfaction or unsustainable unit economics
  2. 02HIGHMultiple litigation cases involving breach of contract, fiduciary duty, and fraud allegations indicate adversarial franchisor-franchisee relationship
  3. 03MEDNo Item 19 (Financial Performance Representation) disclosed despite $386K average net income claim, preventing verification of earnings
  4. 04MINOR5% combined royalty + licensing fees on $1.8M revenue creates $91K+ annual burden; sustainability questionable given declining unit count
  5. 05HIGHGoing Concern = False suggests parent company (Biglari Holdings) or franchise entity has solvency/operational concerns affecting support
  6. 06HIGHLitigation pattern shows enforcement of pricing/promotion policies and termination disputes, indicating franchisor control conflicts

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.