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B67/100FDD 2024

Ultimate Sustainability — Litigation & Risk

Education - Tutoring & Test Prep · FDD Items 3, 4 & 5

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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
67 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID

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

What drove the 67/100 rating

Risk Score Breakdown

  1. 01HIGHGoing Concern Warning: Franchisor flagged as not a going concern, indicating potential financial distress or operational viability issues
  2. 02MINORExtreme Unit Scarcity: Only 3 units system-wide with unknown/likely stagnant growth suggests failed franchise model or early-stage unproven concept
  3. 03MINORNo Net Income Disclosure: Absence of Item 19 financial performance representation prevents validation of $602k average revenue claim and actual profitability
  4. 04MINORHigh Royalty Floor: $3,000/month minimum ($36,000 annually) represents 6% of claimed revenue, creating cash flow pressure for underperforming locations
  5. 05MINORInadequate Unit Data: Unable to determine if 3 units are growing, shrinking, or static; lack of transparency on franchisee success rates
  6. 06MINORTop-Heavy Investment Ratio: $115k-$235k investment against $602k average revenue offers modest ROI margin with high fixed royalty burden

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.