D72/100FDD 2025
The Coffee Bean & Tea Leaf — Litigation & Risk
Food & Beverage - Coffee & Tea · FDD Items 3, 4 & 5
Moderate — Review
5 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
5
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
72 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID
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
California
State whose law governs disputes — relevant if you're not based there
What drove the 72/100 rating
Risk Score Breakdown
- 01MEDUnit count declined 10.4% YoY (179 units) indicating system contraction and potential franchisee struggles
- 02HIGHMultiple active litigation cases involving deceptive trade practices and misrepresentation — suggests franchisor credibility issues
- 03MEDNet income not disclosed in Item 19 — prevents accurate ROI analysis and may indicate poor franchisee profitability
- 04MINORInvestment range of $531K–$1.43M carries high capital burden relative to average revenue of $1.31M with unknown net margins
- 05MINOR5.5% royalty on gross revenues (not net) combined with declining unit economics suggests margin compression
- 06HIGHNo 'Going Concern' status is false — indicates potential franchisor financial stability 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.