B55/100FDD 2025
The Alternative Board — Litigation & Risk
Business Services - Other · FDD Items 3, 4 & 5
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
55 / 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
19
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
Colorado
State whose law governs disputes — relevant if you're not based there
What drove the 55/100 rating
Risk Score Breakdown
- 01MINORDeclining unit count (-4.0% YoY) suggests system contraction and potential market saturation or franchisee dissatisfaction
- 02MINORNo average revenue or net income disclosure (Item 19) prevents validation of earnings claims and ROI assessment
- 03MINORHigh royalty rate (20% at entry) on collected amounts creates aggressive cash drain, especially problematic for early-stage advisory businesses with variable cash flow
- 04HIGHRecent litigation (2023) involving non-payment and covenant violations indicates franchisee financial distress and enforcement challenges
- 05MINORUnprotected territory exposes franchisees to direct competition from other TAB board members in same geographic area
- 06MED5-year term is relatively short; limited runway to build recurring client base and recoup $44,000 franchise fee plus initial investment
- 07MINORSliding scale royalty structure (20%-6%) suggests performance-based model that may mask true cost burden in early years
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.