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A51/100FDD 2024

Sushi Avenue — Litigation & Risk

Food & Beverage - Full Service · FDD Items 3, 4 & 5

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Moderate — Review

4 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
4
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
179
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

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

What drove the 51/100 rating

Risk Score Breakdown

  1. 01MINORNo financial performance disclosure (Item 19) — cannot verify claimed average revenue or profitability
  2. 02HIGHGoing Concern status is False, indicating potential financial instability at franchisor level
  3. 03HIGHActive litigation involving franchisor affiliate over contracts and insurance disputes suggests operational/legal friction
  4. 04MINORRoyalty rate range of 0-25% is unusually wide and vague — unclear what triggers escalation or how it's calculated
  5. 05MINORNo territorial protection — franchisees face direct competition from other Sushi Avenue units and franchisor
  6. 06MINORUnit count (323) with unknown growth trajectory — cannot assess system momentum or franchisee success rates
  7. 07MINORShort 3-year initial term limits franchisee security and commitment certainty
  8. 08MINORWide investment range ($6,600–$102,970) suggests inconsistent unit economics or unclear cost structure

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.