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F83/100FDD 2022

The Lighting Squad — Litigation & Risk

Home Services - Other · FDD Items 3, 4 & 5

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Moderate — Review

2 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
83 / 100
FranchiseVerdict composite
Rating
AVOID
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
Tennessee
State whose law governs disputes — relevant if you're not based there

What drove the 83/100 rating

Risk Score Breakdown

  1. 01MINOROnly 2 units in system with unknown growth trajectory indicates minimal scale and unproven business model replicability
  2. 02MEDFinancial performance data (revenue and net income) completely undisclosed — unable to validate ROI on $48,150–$90,500 investment
  3. 03MINOREscalating royalty structure ($750→$1,200→$1,650 monthly) creates increasing financial pressure on franchisees without performance benchmarks
  4. 04HIGHGoing concern status is 'False' — suggests the franchisor itself may face operational viability questions
  5. 05HIGHActive litigation involving CEO (fraud and FTC violations) and administrative proceeding regarding unregistered franchise sales by affiliate raises regulatory and ethical concerns
  6. 06MINORNo Item 19 (financial performance representations) prevents prospective franchisees from evaluating realistic return expectations
  7. 07MINORTwo-unit system with unknown growth suggests franchisor may be testing model rather than operating established franchise

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.