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A53/100FDD 2025

The Spice & Tea Exchange — Litigation & Risk

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
53 / 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
39
Government-backed loans issued
Default rate
5.6%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$8.2M
Avg loan size
$210K
Participating lenders
16

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

What drove the 53/100 rating

Risk Score Breakdown

  1. 01MEDNet income not disclosed in Item 19 — impossible to assess actual profitability despite $542,747 average revenue
  2. 02MINORSlow unit growth of only 4.5% YoY with 94 total units suggests mature/stalling system in specialty retail
  3. 03MINORHigh royalty floor of $1,750/month ($21,000/year) creates cash drain risk for underperforming locations
  4. 04MEDTotal investment range ($298k-$532k) is substantial for a specialty food retail concept with no disclosed profit benchmarks
  5. 05MINORFranchise fee of $38,750 is steep relative to transparent earnings data — suggests reliance on franchise fees vs. franchisee success

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.