FranchiseVerdict
THE LITTLE GYM logo
A54/100FDD 2025

The Little Gym — Litigation & Risk

Health & Fitness · FDD Items 3, 4 & 5

Back to overview

Moderate — Review

5 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
5
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
54 / 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
261
Government-backed loans issued
Default rate
14.9%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
24 loans
Loans charged off or defaulted
Total loan volume
$62.2M
Avg loan size
$238K
Participating lenders
87

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

What drove the 54/100 rating

Risk Score Breakdown

  1. 01MEDNo Item 19 (Average Unit Volume) disclosed — impossible to validate ROI claims or compare profitability against $519k-$757k investment
  2. 02HIGHMultiple litigation cases including breach of contract, non-compete disputes, and trade secret theft suggest contentious franchisor-franchisee relationships
  3. 03MINORRegistration violations in Maryland and California (affiliate brand) indicate compliance issues with state franchise laws
  4. 04MINORHigh royalty floor ($2,500/month minimum) creates fixed cost burden; franchisees must generate ~$31,250 monthly sales just to break even on royalties alone
  5. 05HIGHUnit growth of 17.8% YoY is positive but insufficient to offset litigation and disclosure concerns in risk profile
  6. 06HIGHAbsence of going concern disclaimer is positive, but combined with other factors suggests operational friction

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.