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B57/100FDD 2024

Town Square — Litigation & Risk

Education - Children's Programs · 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
57 / 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
10
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$21.0M
Avg loan size
$2.1M
Participating lenders
7

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

What drove the 57/100 rating

Risk Score Breakdown

  1. 01HIGHGoing Concern warning indicates financial instability at franchisor level despite franchise fee revenue
  2. 02MINOROnly 8 units with 40% YoY growth suggests very early/unproven system (could be volatile)
  3. 03MINORNet income of $161,949 on $1.04M revenue yields ~15.5% net margin—below typical retail/service benchmarks and concerning given 7% royalty burden
  4. 04MINORNo Item 19 financial performance representation limits ability to validate claimed average revenue figures
  5. 05MINORHigh initial investment ($847K-$1.39M) relative to small franchise base creates liquidity and support risk
  6. 06MINORSpread between low and high investment range suggests high variance in unit economics or unclear startup costs

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.