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B64/100FDD 2025

sweetFrog — Litigation & Risk

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

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Elevated Risk

20 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
20
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
64 / 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
15
Government-backed loans issued
Default rate
20.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
2 loans
Loans charged off or defaulted
Total loan volume
$4.2M
Avg loan size
$283K
Participating lenders
12

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

What drove the 64/100 rating

Risk Score Breakdown

  1. 01MEDSignificant unit decline of 6.8% YoY (206 units) indicates system contraction and potential market saturation or operational issues
  2. 02HIGHExtensive litigation history involving MTY USA across multiple brands (Famous Dave's, Papa Murphy's, Wetzel's) for franchise law violations, misrepresentations, and breach of contract raises systemic compliance concerns
  3. 03MEDNo protected territory disclosed, creating direct competition risk where multiple franchisees can operate in same area and cannibalize sales
  4. 04MEDNet income not disclosed in Item 19, preventing franchisees from validating actual profitability claims; only gross revenue of $519k provided
  5. 05HIGHGoing Concern status is False, suggesting potential financial instability of the parent company (MTY USA) and uncertainty about franchisor support
  6. 06MEDHigh investment ceiling of $658,500 paired with declining unit count and undisclosed net margins creates significant ROI uncertainty
  7. 07MINOR5% royalty on gross sales means no reduction during low-revenue periods, pressuring franchisees during economic downturns

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.