FranchiseVerdict
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A48/100FDD 2025

Venture X — Litigation & Risk

Other · FDD Items 3, 4 & 5

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Moderate — Review

4 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
4
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
48 / 100
FranchiseVerdict composite
Rating
STRONG
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
27
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
$35.7M
Avg loan size
$1.3M
Participating lenders
11

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

What drove the 48/100 rating

Risk Score Breakdown

  1. 01MINORNo Item 19 (Net Income) disclosure limits ability to assess actual profitability; average revenue of $1.5M does not confirm franchisees achieve this
  2. 02MINORMultiple regulatory consent orders (2021, 2022 California; 1996 Maryland; 1998 FTC injunction against affiliate) indicate persistent compliance and sales practice violations
  3. 03MINORSlow unit growth (7.0% YoY on only 61 units) suggests stagnant expansion and potential market saturation or franchisee satisfaction issues
  4. 04MINORHigh franchise fee ($79,500) combined with broad royalty structure (greater of 6% or $1,500/month minimum) creates significant fixed cost burden before profitability
  5. 05MINOR35-year term is unusually long and locks franchisees into relationship with franchisor having compliance history
  6. 06MINOR2022 California unregistered offering violation at trade show indicates recent (not historical) regulatory lapses

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.