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A37/100FDD 2025

Tropical Smoothie Cafe — Litigation & Risk

Food & Beverage - Full Service · FDD Items 3, 4 & 5

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Moderate — Review

1 case disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
37 / 100
FranchiseVerdict composite
Rating
STRONG
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
323
Government-backed loans issued
Default rate
1.8%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
2 loans
Loans charged off or defaulted
Total loan volume
$147.6M
Avg loan size
$457K
Participating lenders
96

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

What drove the 37/100 rating

Risk Score Breakdown

  1. 01MEDNo Item 19 (Average Unit Volume) disclosed — unable to verify the $1.005M average revenue claim or validate ROI potential
  2. 02HIGHLitigation history involving fraudulent financial performance misrepresentations regarding a breakfast initiative suggests franchisor made unsubstantiated claims to franchisees
  3. 03MINORHigh initial investment range ($340K–$814K) with 6% royalty creates significant break-even threshold; profitability unclear without net income disclosure
  4. 04MINOR10.4% YoY unit growth is modest for QSR segment; slower growth may indicate market saturation or franchisee struggles
  5. 05MED15-year term with $35K franchise fee and 6% royalty locks franchisees into long-term relationship with limited exit flexibility

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.