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D75/100FDD 2025
The Straw Modern Milkshakes — Litigation & Risk
Food & Beverage - Full Service · 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
2
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
Not waived
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
California
State whose law governs disputes — relevant if you're not based there
What drove the 75/100 rating
Risk Score Breakdown
- 01MINOROnly 1 unit in system with unknown growth trajectory suggests brand is either brand new, stalled, or failing to attract franchisees
- 02MEDNo Item 19 financial disclosure (Avg Revenue and Net Income not disclosed) prevents investors from validating ROI claims or unit economics
- 03HIGHGoing Concern designation indicates the franchisor itself may have financial viability issues, raising questions about support and sustainability
- 04MINORWide investment range ($67.5K–$584.5K) suggests either highly variable build-outs or unclear cost structure that could hide additional expenses
- 05MINOROnly 1 operating unit means zero credible franchisee references and no proof of replicable business model
- 06MED6% royalty on undisclosed revenue creates opacity; combined with lack of financials, franchisees cannot forecast actual profitability
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.