FranchiseVerdict
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D72/100FDD 2025

Tom N Toms Coffee — Litigation & Risk

Food & Beverage - Coffee & Tea · FDD Items 3, 4 & 5

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Moderate — Review

1 case disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
1
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
4
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
Total loan volume
$1.8M
Avg loan size
$460K
Participating lenders
2

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 72/100 rating

Risk Score Breakdown

  1. 01MEDSevere unit decline of 33.3% year-over-year (from 15 to 10 units) indicates systemic failure or market exit
  2. 02MINORNo Item 19 financial performance disclosure (avg revenue/net income not provided) prevents informed ROI assessment
  3. 03MINOR2016 California franchise law violations (untrue statements, unregistered sellers, non-disclosure) demonstrate regulatory compliance failures
  4. 04HIGHGoing Concern = False suggests potential liquidity crisis or operational distress at franchisor level
  5. 05MEDHigh initial investment ($370K-$487K) combined with 4% royalty burden creates significant financial risk with undisclosed payback period
  6. 06MINORFinal Consent Order and $22,500 in penalties indicate franchisor was caught making misrepresentations to 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.