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D69/100FDD 2024
Two Hands Corn Dogs — Litigation & Risk
Food & Beverage - Quick Service · FDD Items 3, 4 & 5
Moderate — Review
3 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
3
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
69 / 100
FranchiseVerdict composite
Rating
CAUTION
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
3
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
$1.2M
Avg loan size
$402K
Participating lenders
3
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
Georgia
State whose law governs disputes — relevant if you're not based there
What drove the 69/100 rating
Risk Score Breakdown
- 01HIGHGoing concern status is FALSE — fundamental viability question about franchisor operations
- 02HIGHRegulatory violations in California: unregistered franchise sales and failure to disclose litigation demonstrates compliance failures and investor risk
- 03MEDNo disclosed average revenue or net income (Item 19) — impossible to evaluate unit economics or ROI
- 04HIGHTrademark misuse litigation ($45k settlement) suggests brand integrity and IP protection concerns
- 05MINORUnprotected territory creates direct competition risk from other franchisees or franchisor
- 06MINORHigh unit growth rate (55% YoY) is unsustainable and may indicate aggressive recruitment over franchisee success
- 07MINOR5-year term is relatively short with no renewal guarantees mentioned
- 08MINORAdministrative penalties totaling $40k indicate systemic disclosure and governance issues
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.