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B66/100FDD 2025

Ume Tea — Litigation & Risk

Food & Beverage - Quick 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
66 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID

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

What drove the 66/100 rating

Risk Score Breakdown

  1. 01HIGHActive litigation alleging breach of franchise agreement, fraud, and franchise law violations with $600,000 damages claim filed June 2024
  2. 02HIGHGoing concern status is FALSE — indicates potential financial instability or viability concerns at corporate level
  3. 03MEDNo average revenue or net income disclosure (Item 19 missing) — cannot assess realistic ROI on $160,700–$427,100 investment
  4. 04MINOROnly 13 units system-wide with unknown growth trajectory — suggests either new/stalled brand with minimal track record
  5. 05MINORZero territory protection — franchisees face direct competition from other Ume Tea locations and no geographic exclusivity
  6. 06MEDHigh investment-to-unit ratio ($160K–$427K) with 4% royalty but no disclosed profitability metrics creates blind investment risk

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.