FranchiseVerdict
B59/100FDD 2025

Wanpo Tea Shop — Litigation & Risk

Food & Beverage - Coffee & Tea · 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
59 / 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
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 59/100 rating

Risk Score Breakdown

  1. 01MEDRegulatory violation in May 2023: California DFPI issued Notice of Violation for unlicensed franchise sales; rescission offer declined by franchisee signals unresolved dispute
  2. 02MEDCritical financial opacity: No average revenue or net income disclosed in FDD Item 19, making ROI assessment impossible
  3. 03HIGHGoing Concern status is FALSE: Indicates potential financial instability at corporate level despite unit growth claims
  4. 04MINORHigh upfront investment ($196.5K–$352.9K) paired with 3% royalty + $600 minimum monthly fee creates break-even pressure on units with <$20K monthly sales
  5. 05MINORRapid unit growth (120% YoY from unknown baseline to 11 units) appears aggressive for brand without financial transparency; growth sustainability unclear
  6. 06MED5-year term is shorter than industry standard (typically 10), suggesting either corporate caution or limited franchisor confidence in long-term model

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.