D75/100FDD 2024
The Look Salon Suites — Litigation & Risk
Personal Services - Beauty & Salon · FDD Items 3, 4 & 5
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
75 / 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
1
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
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
North Carolina
State whose law governs disputes — relevant if you're not based there
What drove the 75/100 rating
Risk Score Breakdown
- 01MEDOnly 2 operating units with unknown growth trajectory indicates extremely limited system scale and unproven replicability
- 02HIGHItem 19 financial performance data absent (no going concern statement) — cannot independently verify claimed $136,666 average net income or $317,213 revenue figures
- 03MEDHigh initial investment ($940k–$1.19M) paired with only 2 comparable units creates severe due diligence risk and limited peer benchmarking
- 04MINORRoyalty structure (5.5% of gross revenues or $1,000/month minimum) equals ~$1,500–$1,800/month on average unit, consuming 13–16% of stated net income
- 05MINOR10-year franchise term with $55,000 upfront fee suggests franchisor prioritizes front-loaded revenue over unit profitability
- 06HIGHNo disclosed litigation is positive, but minimal unit count makes this statistically unreliable as a safety indicator
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.