Moderate — Review
2 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
59 / 100
FranchiseVerdict composite
Rating
MODERATE
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
Nevada
State whose law governs disputes — relevant if you're not based there
What drove the 59/100 rating
Risk Score Breakdown
- 01MEDNo disclosed average revenue or net income data (Item 19 missing) — impossible to validate ROI on $55.6k-$192.3k investment
- 02MINORAggressive 25% royalty structure on net fees creates unclear profit model and potential for margin compression
- 03HIGHActive litigation in two states (Colorado arbitration for rescission + Virginia unregistered sales lawsuit) indicates regulatory/compliance issues
- 04MINORUnprotected territory creates direct franchisee-to-franchisee competition and cannibalization risk
- 05MEDModest unit growth (13.6% YoY with only 25 total units) suggests limited brand traction and scale challenges
- 06MINOR5-year term is relatively short in tax services, creating renewal uncertainty and relationship instability
- 07HIGHGoing Concern disclosure raises questions about franchisor financial viability and ongoing support sustainability
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.