FranchiseVerdict
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D77/100FDD 2025

The Human Bean — Litigation & Risk

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

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Lower Risk

No litigation cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
77 / 100
FranchiseVerdict composite
Rating
CAUTION
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
36
Government-backed loans issued
Default rate
38.5%
vs <3% typical · system-wide
5-yr default rate
50.0%
Defaults
5 loans
Loans charged off or defaulted
Total loan volume
$20.1M
Avg loan size
$557K
Participating lenders
22

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

What drove the 77/100 rating

Risk Score Breakdown

  1. 01MINORNo royalty fees create unclear franchisor revenue model and potential misaligned incentives for corporate support
  2. 02MINORSignificant gap between average revenue ($847,648) and net income ($94,115) suggests ~11% net margin, indicating high operating costs or competitive pricing pressure
  3. 03MINORHigh initial investment range ($572K-$1.3M) requires strong unit economics to achieve acceptable ROI payback period
  4. 04MEDNo Item 19 financial performance representations disclosed, limiting ability to validate claimed average revenue figures
  5. 05MINORModest unit growth of 13% YoY may indicate market saturation in coffee/beverage category or franchisee recruitment challenges

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.