B64/100FDD 2024
Valhallan — Litigation & Risk
Education - Tutoring & Test Prep · FDD Items 3, 4 & 5
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
64 / 100
FranchiseVerdict composite
Rating
MODERATE
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
11
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
$1.8M
Avg loan size
$165K
Participating lenders
2
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
Texas
State whose law governs disputes — relevant if you're not based there
What drove the 64/100 rating
Risk Score Breakdown
- 01MINORExtreme unit growth (700% YoY) suggests either brand launch/manipulation or unsustainable expansion that may not be repeatable
- 02HIGHGoing Concern = False indicates potential financial distress or structural issues at franchisor level
- 03MINORZero financial disclosure (no Item 19 average revenues/net income) prevents ROI validation and suggests weak unit economics
- 04MINORRoyalty floor of $500/month ($6,000/year) creates break-even pressure on low-revenue units
- 05MINOROnly 9 total units with explosive growth pattern indicates immature system lacking stability and proven operational model
- 06MEDHigh initial investment range ($82,950–$329,850) combined with undisclosed profitability creates significant ROI uncertainty
- 07MINOR10-year term locks franchisee into relationship with unproven franchisor during critical growth phase
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.