FranchiseVerdict
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D75/100FDD 2025

Steamatic — Litigation & Risk

Other · FDD Items 3, 4 & 5

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Moderate — Review

1 case disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
75 / 100
FranchiseVerdict composite
Rating
CAUTION
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
46.2%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
6 loans
Loans charged off or defaulted
Total loan volume
$2.0M
Avg loan size
$154K
Participating lenders
10

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

What drove the 75/100 rating

Risk Score Breakdown

  1. 01HIGHSignificant litigation involving $1.14M settlement for breach of contract, fraud, and fraudulent inducement claims raises questions about franchisor integrity and disclosure practices
  2. 02MINORNo Item 19 financial performance disclosure (Avg Revenue and Net Income not provided) makes it impossible to validate ROI on $222K-$444K investment and assess profitability benchmarks
  3. 03MINOROnly 44 franchise units with unknown growth trajectory suggests either mature declining system or struggling brand unable to attract new franchisees
  4. 04MINORWide royalty range (1%-8%) with no clarity on triggers/escalation creates unpredictable cost structure and potential for earnings compression
  5. 05HIGHGoing concern status indicates potential financial instability at franchisor level, threatening support infrastructure and system viability

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.