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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
70 / 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
10
Government-backed loans issued
Default rate
16.7%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$1.6M
Avg loan size
$162K
Participating lenders
7
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
Massachusetts
State whose law governs disputes — relevant if you're not based there
What drove the 70/100 rating
Risk Score Breakdown
- 01MEDUnit count declined 20.2% year-over-year (68 units), indicating significant system contraction and potential franchisee dissatisfaction
- 02MEDNo disclosed average revenue or net income (Item 19) prevents validation of ROI claims and earnings potential
- 03MEDEscalating royalty structure ($12K-$48K minimum) creates financial pressure on low-volume locations, especially given undisclosed average sales
- 04HIGH2019 Washington State litigation over nonpoaching clause enforcement suggests regulatory compliance issues and restrictive covenant disputes
- 05MINORHigh franchise fee ($60,000) combined with 10% Year 1 royalty creates substantial upfront costs with unclear revenue visibility
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.