A41/100FDD 2025
Success On The Spectrum — Litigation & Risk
Other · FDD Items 3, 4 & 5
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
41 / 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
63
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
$23.2M
Avg loan size
$368K
Participating lenders
19
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 41/100 rating
Risk Score Breakdown
- 01MEDNo Item 19 financial disclosure (avg revenue and net income not disclosed) prevents accurate ROI assessment on $320.5K-$848.2K investment
- 02HIGHTwo litigation cases involving breach of contract and tortious interference suggest franchisor-franchisee relationship tensions despite settlements
- 03MINORRapid unit growth (75.9% YoY) may indicate aggressive expansion ahead of proven unit economics, increasing failure risk for newer franchisees
- 04MINORHigh investment range ($528K spread) with capped $5K/month royalty suggests unclear path to profitability for lower-investment models
- 05HIGHGoing concern status is FALSE — indicates potential financial instability at franchisor level, though context unclear
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.