FranchiseVerdict
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A40/100FDD 2026

The Honey Baked Ham Co. — Litigation & Risk

Food & Beverage - Coffee & Tea · FDD Items 3, 4 & 5

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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
40 / 100
FranchiseVerdict composite
Rating
STRONG
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
16
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$6.3M
Avg loan size
$392K
Participating lenders
11

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Not required
You retain the right to sue in court
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
Georgia
State whose law governs disputes — relevant if you're not based there

What drove the 40/100 rating

Risk Score Breakdown

  1. 01MINORStagnant unit growth (1.9% YoY) suggests market saturation or system challenges in a mature 448-unit chain
  2. 02HIGHRecent litigation (settled July 2025) indicates franchisor-franchisee relationship friction and potential operational delays
  3. 03MINORNet income of $106,752 on $1.27M revenue (8.4% margin) is modest given seasonal business concentration and high initial investment of up to $829,600
  4. 04HIGHNo Item 19 (going concern = False) limits financial transparency and raises questions about franchisor's willingness to disclose performance data
  5. 05MINOR6% royalty + seasonal revenue fluctuations create cash flow pressure during off-peak months

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.