FranchiseVerdict
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D72/100FDD 2024

Tio Juan’s Margaritas Mexican Restaurant — Litigation & Risk

Food & Beverage - Full Service · 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
72 / 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
5
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
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
New Hampshire
State whose law governs disputes — relevant if you're not based there

What drove the 72/100 rating

Risk Score Breakdown

  1. 01MEDUnit count declined 14.3% YoY (25 units) indicating system contraction and franchisee struggles
  2. 02MINORNo protected territory creates direct competition risk and cannibalization between locations
  3. 03MINORHigh initial investment range ($488K-$2.9M) with 5% royalty burden on thin restaurant margins (~22% net margin)
  4. 04HIGHGoing Concern status is FALSE — suggests corporate financial instability or disclosure issues
  5. 05MINORNo Item 19 financial performance representation limits ability to validate the $515K average net income claim
  6. 06MINORWide investment spread ($2.4M variance) indicates inconsistent unit economics and unclear capital requirements
  7. 07MINORRelatively low franchise fee ($40K) may indicate undervalued system or inability to attract quality franchisees

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.