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D72/100FDD 2025

Tonchin — 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

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

What drove the 72/100 rating

Risk Score Breakdown

  1. 01MINOROnly 3 units in system with unknown growth trajectory suggests minimal scale and validation
  2. 02MINORNo average revenue or net income disclosure (no Item 19) prevents ROI assessment and profitability verification
  3. 03HIGHGoing Concern = False indicates franchisor may have financial/operational viability issues
  4. 04MEDHigh investment range ($1.4M-$2.7M) with no disclosed average returns creates severe risk-reward imbalance
  5. 05MINORUnprotected territory means direct competition from other franchisees in same market
  6. 06MINORRoyalty structure tied to weekly gross sales (unusual) lacks transparency on actual franchisee obligations
  7. 07MINORExtremely small unit count suggests brand has failed to attract or retain 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.