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A45/100FDD 2025

The Shutter House — Litigation & Risk

Home Services - Other · 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
45 / 100
FranchiseVerdict composite
Rating
STRONG
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
Alabama
State whose law governs disputes — relevant if you're not based there

What drove the 45/100 rating

Risk Score Breakdown

  1. 01MINOROnly 4 units in system with no Item 19 financial disclosure creates validation difficulty for $97.5K-$198.3K investment
  2. 02MINORExtremely aggressive unit growth (50% YoY) from micro base (4 units) suggests unsustainable expansion or recent launches
  3. 03MINORRoyalty floor of $25,000/year on average net income of $195K represents 12.8% effective tax, compressing margins significantly
  4. 04MEDHigh franchise fee ($60K) represents 61.5% of total minimum investment ($97.5K), leaving limited working capital
  5. 05MINORProtected territory with only 4 units suggests either new concept or market saturation concerns in existing territories

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.