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A51/100FDD 2024

Suburban Studios — Litigation & Risk

Other · 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
51 / 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
29
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
$83.7M
Avg loan size
$2.9M
Participating lenders
13

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
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
No
Franchisor can match any purchase offer when you try to sell
Governing law
Maryland
State whose law governs disputes — relevant if you're not based there

What drove the 51/100 rating

Risk Score Breakdown

  1. 01MEDMassive capital requirement ($8.5M–$11.1M) with no disclosed average revenue or net income data to validate ROI potential
  2. 02HIGHMultiple active litigation cases including class action suit, anti-competitive practice claims, and civil rights violations suggesting systemic operational or governance issues
  3. 03MINORAggressive unit growth of 38.7% YoY raises sustainability concerns and may indicate recruitment-heavy expansion rather than organic profitability
  4. 04MINORNo Item 19 financial performance disclosure prevents independent verification of franchisee profitability claims
  5. 05MINOR6.0% royalty on gross room revenues creates fixed cost burden regardless of net profitability, particularly concerning given lack of income transparency

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.