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F82/100FDD 2024

The Bar Method — Litigation & Risk

Health & Fitness · FDD Items 3, 4 & 5

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Moderate — Review

3 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
3
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
82 / 100
FranchiseVerdict composite
Rating
AVOID
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
51
Government-backed loans issued
Default rate
20.6%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
7 loans
Loans charged off or defaulted
Total loan volume
$18.1M
Avg loan size
$355K
Participating lenders
21

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

What drove the 82/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-2.7% YoY) indicates system contraction and potential franchisee struggles
  2. 02HIGHMultiple active litigation matters including Item 19 misrepresentation and unregistered franchise sales in multiple states
  3. 03MEDNet income not disclosed despite average revenue of $383,065, suggesting profitability concerns or unwillingness to share performance data
  4. 04HIGHGoing concern status raises questions about franchisor's financial viability and ability to support franchisees
  5. 05MEDHigh initial investment ($356K-$512K) combined with unit decline creates elevated risk of capital loss
  6. 06MINOR6% royalty on gross revenue (not net) creates cash flow pressure during slow periods

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.