FranchiseVerdict
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D72/100FDD 2024

The Original Dave’s Cosmic Subs — Litigation & Risk

Food & Beverage - Full Service · 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
72 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

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

What drove the 72/100 rating

Risk Score Breakdown

  1. 01MINORSystem contracted 15.4% YoY (21 units down from ~25); indicates declining franchise appeal and potential systemic issues
  2. 02MEDNo average revenue or net income disclosed in FDD Item 19; impossible to validate ROI or assess unit-level profitability
  3. 03MINORNo protected territory; franchisees face direct competition from other Dave's Cosmic Subs locations and company-owned stores
  4. 04MINORWide investment range ($253K–$561K) suggests inconsistent build-out costs, site variability, or hidden expenses
  5. 05HIGHGoing Concern flag is FALSE, but combined with unit contraction, suggests franchisor may lack financial stability or growth strategy
  6. 06MINORMinimum weekly royalty of $200 ($10,400/year) mandatory even during slow periods; creates fixed cost burden on underperforming units
  7. 07MED10-year term is long commitment into a shrinking system with no exit clarity or buyback provisions disclosed
  8. 08MINORLow franchisee count (21 units) limits peer support network and increases isolation risk for new franchisees

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.