B58/100FDD 2023
Three Dog Bakery — Litigation & Risk
Food & Beverage - Bakery · 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
58 / 100
FranchiseVerdict composite
Rating
MODERATE
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
16
Government-backed loans issued
Default rate
9.1%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$3.0M
Avg loan size
$188K
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
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
Missouri
State whose law governs disputes — relevant if you're not based there
What drove the 58/100 rating
Risk Score Breakdown
- 01MEDNo Item 19 (Average Unit Volume) disclosed despite $518K average revenue claim — inability to verify profitability or net income creates transparency gap
- 02MEDModest unit growth of 10.8% YoY with only 43 locations suggests limited brand momentum and potential market saturation concerns
- 03MEDHigh initial investment range ($181K-$314K) relative to disclosed average revenue ($518K) means breakeven timeline and ROI remain unvalidated
- 04HIGHGoing Concern status is False — indicates franchisor reported going concern warnings in recent financial statements, raising operational/financial stability questions
- 05MED5.5% royalty on gross sales (not net) combined with undisclosed net income means actual profitability for franchisees is unknown
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.