FranchiseVerdict
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B57/100FDD 2026

Sun Tan City — Litigation & Risk

Personal Services - Beauty & Salon · 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
57 / 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
2
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
Total loan volume
$358K
Avg loan size
$179K
Participating lenders
2

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

What drove the 57/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-3.7% YoY) indicates system contraction and potential market saturation in tanning industry
  2. 02MEDNo Item 19 financial disclosure (Net Income not disclosed) prevents validation of actual profitability claims
  3. 03HIGHGoing Concern status FALSE suggests potential franchisor financial instability or operational concerns
  4. 04MINORHigh initial investment ($1.0M-$1.8M) paired with declining unit economics creates significant franchisee risk
  5. 05MINORUnprotected territory exposes franchisees to internal competition and cannibalization from new units
  6. 06MINORAging business model: indoor tanning faces secular headwinds from UV health concerns and changing consumer preferences
  7. 07MED8% royalty on $627K average revenue ($50K+ annual fee) leaves limited margin for net profit with undisclosed expenses

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.