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F79/100FDD 2024

The Tutoring Center — Litigation & Risk

Education - Tutoring & Test Prep · 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
79 / 100
FranchiseVerdict composite
Rating
AVOID
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
17
Government-backed loans issued
Default rate
28.6%
vs <3% typical · system-wide
5-yr default rate
100.0%
Defaults
2 loans
Loans charged off or defaulted
Total loan volume
$2.3M
Avg loan size
$137K
Participating lenders
13

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

What drove the 79/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 3.4% YoY indicates contracting system with 84 locations losing momentum
  2. 02MINORNo Item 19 (average revenue/income) disclosure prevents ROI validation and suggests weak unit economics
  3. 03HIGHGoing Concern flag is FALSE (inverted logic) — system may have solvency/sustainability concerns
  4. 04MINORFixed $1,500/month royalty plus annual increases creates rising burden on declining/mature locations
  5. 05MEDHigh initial investment ($114K-$191K) with no disclosed average revenue creates blind ROI assessment
  6. 06MED10-year term locks franchisees into declining brand with limited performance benchmarks

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.