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D75/100FDD 2025

The Red Collection — Litigation & Risk

Lodging - Hotels & Motels · FDD Items 3, 4 & 5

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Moderate — Review

4 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
4
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

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

What drove the 75/100 rating

Risk Score Breakdown

  1. 01HIGHGoing Concern status is FALSE — indicates potential financial instability or operational viability questions at corporate level
  2. 02MINOROnly 5 units system-wide with unknown/likely stagnant growth — minimal scale and no evidence of expansion momentum
  3. 03MINORThree active legal disputes (1 pending breach/tortious interference, 2 collection actions in 2024) plus concluded Maryland franchise registration violations — pattern of compliance and relationship issues
  4. 04MEDZero financial transparency — no Item 19 average revenue or net income disclosed, making ROI analysis impossible
  5. 05MEDHigh investment range ($220K–$1.57M) combined with 4.5% royalty with no performance benchmarks or disclosed unit economics
  6. 06MINORRecent collection actions by affiliate against franchisees in 2024 suggest cash flow stress among operators and potential franchisor financial pressure

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.