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F83/100FDD 2022

Sweatheory — Litigation & Risk

Health & Fitness · 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
83 / 100
FranchiseVerdict composite
Rating
AVOID
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 83/100 rating

Risk Score Breakdown

  1. 01MINOROnly 2 units in system with unknown growth trajectory suggests nascent/stalling franchise
  2. 02MEDNo disclosed average revenue or net income (Item 19 absent) prevents ROI validation
  3. 03MINORWide investment range ($192.5K–$728K) indicates unclear unit economics or high variability
  4. 04HIGHGoing concern status is FALSE, suggesting financial instability at franchisor level
  5. 05MED5% royalty on undisclosed revenue makes it impossible to model franchisee profitability
  6. 06MINORMinimal franchisee base (2 units) prevents meaningful performance validation or peer comparison

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.