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B66/100FDD 2024
Taco John's — Litigation & Risk
Food & Beverage - Quick Service · FDD Items 3, 4 & 5
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
66 / 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
74
Government-backed loans issued
Default rate
21.5%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
14 loans
Loans charged off or defaulted
Total loan volume
$26.5M
Avg loan size
$358K
Participating lenders
39
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
Wyoming
State whose law governs disputes — relevant if you're not based there
What drove the 66/100 rating
Risk Score Breakdown
- 01MINORDeclining unit count (-1.1% YoY) suggests system contraction and potential market saturation or franchisee dissatisfaction
- 02MEDNet Income not disclosed in Item 19 — cannot validate actual profitability claims or ROI against $437k-$2.08M investment range
- 03MINORWide investment range ($1.64M spread) indicates inconsistent unit economics or unclear cost structure for prospective franchisees
- 04HIGHNo going concern statement is a minor positive, but combined with declining units raises questions about long-term brand viability
- 05MINORAvg revenue of $1.23M is modest for QSR; at 5% royalty this yields only ~$61.7k in gross royalties per unit, suggesting thin margins for franchisees
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.