D72/100FDD 2025
Waffle Love — Litigation & Risk
Food & Beverage - Full Service · FDD Items 3, 4 & 5
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
72 / 100
FranchiseVerdict composite
Rating
CAUTION
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
1
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$2.2M
Avg loan size
$2.2M
Participating lenders
1
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
Utah
State whose law governs disputes — relevant if you're not based there
What drove the 72/100 rating
Risk Score Breakdown
- 01HIGHActive litigation involving breach of fiduciary duty and conversion claims with court-appointed receiver (Feb 2022 - Oct 2024) signals governance dysfunction and potential mismanagement of franchisee funds
- 02MINORAsset seizure and forced sale to KSBW Management Inc. in October 2024 indicates franchisor financial distress and raises questions about operational continuity and support
- 03MINOROnly 10 units in system with unknown/stagnant growth trajectory suggests failed expansion model and difficulty attracting/retaining franchisees despite $685K average revenue
- 04MEDNet income not disclosed despite $685K average revenue creates opacity about actual profitability — 6% royalty on $685K yields only $41K gross, leaving significant question marks on net margins after COGS, labor, rent
- 05HIGHGoing Concern status technically true but timing coincides with litigation resolution and asset sale, suggesting financial precarity masked by technical solvency
- 06MEDHigh investment range ($326.5K-$702.5K) combined with undisclosed profitability and small unit base indicates difficulty achieving ROI within 10-year term
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.