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D75/100FDD 2024

Valbridge Property Advisors — Litigation & Risk

Real Estate · 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
75 / 100
FranchiseVerdict composite
Rating
CAUTION
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
Florida
State whose law governs disputes — relevant if you're not based there

What drove the 75/100 rating

Risk Score Breakdown

  1. 01HIGHGoing concern status is FALSE — indicates potential financial instability or operational uncertainty at franchisor level
  2. 02MEDZero disclosed units with unknown growth trajectory suggests either brand is new/unproven or experiencing contraction
  3. 03HIGHLitigation history: settled lawsuit ($70,000) involving fiduciary duty breach and intentional interference with franchise sale raises governance concerns
  4. 04MEDNo average revenue or net income disclosure (missing Item 19) prevents ROI validation and suggests franchisor may lack franchisee profitability data
  5. 05MINORUnprotected territory creates direct competition risk between franchisees in same market
  6. 06MINORHigh royalty burden: $27,500 fixed annual fee plus 3.5% of revenues above $725K creates break-even pressure on lower-performing units
  7. 07MINOR5-year term is shorter than industry standard (typical 10 years), creating renewal/stability uncertainty

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.