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
82 / 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
25
Government-backed loans issued
Default rate
38.1%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
8 loans
Loans charged off or defaulted
Total loan volume
$14.9M
Avg loan size
$595K
Participating lenders
19
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
1 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
California
State whose law governs disputes — relevant if you're not based there
What drove the 82/100 rating
Risk Score Breakdown
- 01MINORUnit count declining 6.2% YoY (81 units) signals contracting system despite $3.7M avg revenue
- 02HIGHThree settled litigation cases involving fraud and unfair trade practices indicate governance and disclosure problems
- 03MEDNet income not disclosed despite $3.7M avg gross revenue — suggests profitability concerns or franchisor opacity
- 04MINORHigh initial investment range ($209K–$5M) with royalties up to 6% creates significant breakeven burden
- 05HIGHNo 'Going Concern' statement (False) missing; unclear if franchisor provided Item 19 financial performance representations
- 06MINORFranchise fee ($30K) low relative to build-out costs, suggesting underpriced entry masking real capital requirements
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.