The Flying Biscuit Cafe: Litigation & Risk
Full-Service Restaurants · FDD Items 3, 4 & 5
Elevated Risk
2 cases disclosed in FDD Items 3 and 4. Bankruptcy disclosed in Item 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 2
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- Disclosed
- Franchisor or officer bankruptcy
- Verdict score
- 55 / 100
- FranchiseVerdict composite · higher is better
- Rating
- B
- 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
- 13
- Government-backed loans issued
- Charge-off rate
- 0.0%
- vs 16% franchise average
- 5-yr charge-off rate
- N/A
- Defaults
- 0 loans
- Loans charged off or defaulted
- Total loan volume
- $9.2M
- Avg loan size
- $711K
- Participating lenders
- 8
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
- 1 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
- Georgia
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Adversary Proceeding No. 12-05429 filed August 24, 2012 in U.S. Bankruptcy Court for Northern District of Georgia. Bankruptcy Trustee sued franchisor's affiliates, officers, and directors alleging fraudulent transfers, constructively fraudulent transfers, and wrongful distributions related to sale of S&Q Shack, LLC to Edmonds Capital Fund I, LLC. Claims included improper debt forgiveness and distribution of sale proceeds. Proceeding stayed pending completion of underlying bankruptcy litigation.
What drove the 55/100 verdict
Risk Score Breakdown
- 01MINORNegative equity -$689,783
- 02MINOROld affiliate bankruptcies (2010) settled 2016-17 — low weight
- 03MEDPositive net income $1.86M, $4.4M revenue, audited, Item 19 disclosed
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.