The Counter Custom Burgers: Litigation & Risk
Full-Service Restaurants · FDD Items 3, 4 & 5
Elevated Risk
20 cases disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 20
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 34 / 100
- FranchiseVerdict composite · higher is better
- Rating
- D
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 8
- Government-backed loans issued
- Charge-off rate
- N/A
- vs 16% franchise average
- 5-yr charge-off rate
- N/A
- Defaults
- N/A
- Loans charged off or defaulted
- Total loan volume
- $7.8M
- Avg loan size
- $980K
- Participating lenders
- 6
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
- Arizona
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Two concluded cases: (1) Purav Enterprises, L.L.C., et al. v. The Extreme Pita Franchising USA, Inc., et al. (WA Superior Court, Case No. 15-2-15120-7) - settled March 11, 2016 for $20,000 regarding FIPA violations and misrepresentation; (2) KOHO, Inc. v. Kahala Franchising, L.L.C. (CA Superior Court, Case No. BC572565) - breach of contract and unjust enrichment claim with cross-complaint filed
What drove the 34/100 verdict
Risk Score Breakdown
- 01MINORNet growth -55.6%, turnover 0.5 — heavy contraction
- 02MINOROnly 11 units remaining
- 03HIGH19 litigation matters (mostly affiliate/parent, not brand)
- 04HIGHBankruptcy is old personal Ch.13 of an officer — low weight
- 05MINORStrong parent financials ($252.9M net worth)
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.