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D72/100FDD 2025

Sunny On South — Litigation & Risk

Food & Beverage - Full Service · 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
72 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

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

What drove the 72/100 rating

Risk Score Breakdown

  1. 01MINOROnly 1 existing unit with unknown growth trajectory indicates unproven system scalability
  2. 02MINORNo Item 19 (average revenue/net income disclosure) prevents ROI validation and suggests weak financial performance or franchisor reluctance to disclose
  3. 03HIGHGoing Concern flag is FALSE, meaning the franchisor may have solvency/operational viability issues
  4. 04MINORHigh investment range ($755K-$2.3M) paired with unvalidated revenue makes ROI timeline unclear
  5. 05MINORMinimum $500/month royalty on potentially low-revenue locations creates breakeven risk
  6. 06MINOR10-year term with $40K franchise fee locks franchisees into commitment without performance data
  7. 07HIGHNo litigation disclosure requirement met suggests either no disclosure obligation (younger brand) or deliberately opaque FDD

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.