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D75/100FDD 2025

Teriyaki Madness — Litigation & Risk

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

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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
75 / 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
127
Government-backed loans issued
Default rate
25.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
9 loans
Loans charged off or defaulted
Total loan volume
$54.2M
Avg loan size
$427K
Participating lenders
51

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

What drove the 75/100 rating

Risk Score Breakdown

  1. 01HIGHActive litigation with counterclaims alleging misrepresentation and inadequate franchisor support—suggests systemic operational or support issues
  2. 02HIGHNo Item 19 financial performance representations (Going Concern = False)—unable to independently verify the $85,690 average net income claim
  3. 03MINORHigh initial investment range ($376k–$975k) paired with modest average net income ($85,690 annually) yields 4.4–11.2 year payback period with significant capital risk
  4. 04MINORRoyalty structure (6% of Net Sales) on $1.18M average revenue = ~$70,680 in annual fees, consuming 82% of average net income
  5. 05HIGHLitigation context mentions 'failure to provide support' and 'misuse of marketing funds'—indicates potential franchisor accountability and trust concerns

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.