TREND Transformations / GRANITE Transformations: Litigation & Risk
Quick-Service Restaurants · FDD Items 3, 4 & 5
Elevated Risk
7 cases disclosed in FDD Items 3 and 4. Bankruptcy disclosed in Item 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 7
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- Disclosed
- Franchisor or officer bankruptcy
- Verdict score
- 23 / 100
- FranchiseVerdict composite · higher is better
- Rating
- F
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 22
- Government-backed loans issued
- Charge-off rate
- N/A
- vs 16% franchise average
- 5-yr charge-off rate
- N/A
- Defaults
- 7 loans
- Loans charged off or defaulted
- Total loan volume
- $5.7M
- Avg loan size
- $259K
- Participating lenders
- 0
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
- Florida
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Three actions involving Colin Mackenzie and entities he owned vs. franchisor affiliates. Two lawsuits filed in Federal Court of Australia (VID 1049/2016 and related amended claim) and one in U.S. District Court Southern District of Florida. All three cases resolved following global mediation and settlement agreement. Australian cases involved allegations of breach of director duties, unauthorized withdrawals (AUS$299,000), competitive conduct, and wind-up proceedings.
What drove the 23/100 verdict
Risk Score Breakdown
- 01HIGHRecent affiliate Chapter 11 bankruptcy (E-Stone/Rocksolid Granit, filed Dec 2024)
- 02MINORfinancial_distress = true
- 03HIGH6 litigation matters relative to small 34-unit system
- 04MINORSevere contraction: net growth -27.9%, turnover 67.7%
- 05MINORNo Item 19 disclosure
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.