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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
79 / 100
FranchiseVerdict composite
Rating
AVOID
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
28.6%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
2 loans
Loans charged off or defaulted
Total loan volume
$3.1M
Avg loan size
$312K
Participating lenders
6
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
Not waived
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
Minnesota
State whose law governs disputes — relevant if you're not based there
What drove the 79/100 rating
Risk Score Breakdown
- 01MINORDeclining unit count (-0.5% YoY) signals shrinking franchise system despite travel industry recovery
- 02MINORNo average revenue or net income disclosure (Item 19) prevents ROI assessment and profitability verification
- 03MINORHigh fixed monthly royalty ($1,285) against unclear revenue base creates cash flow risk for underperforming locations
- 04MINORUnprotected territory enables direct competition from other Travel Leaders franchisees within same market
- 05MINORLow initial investment ($2,270-$17,910) suggests minimal support infrastructure and potential quality concerns
- 06MINOR3-year term is unusually short, indicating low franchisor confidence or high franchisee churn expectations
- 07HIGHGoing Concern status absent from disclosure raises questions about franchisor financial stability and long-term viability
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.