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B60/100FDD 2025

Water Babies — Litigation & Risk

Education - Tutoring & Test Prep · FDD Items 3, 4 & 5

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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
60 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID

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

What drove the 60/100 rating

Risk Score Breakdown

  1. 01MEDOnly 2 existing units suggests extremely limited franchise system with unknown growth trajectory and minimal peer support network
  2. 02HIGHNo Item 19 financial disclosure (Going Concern = False) prevents validation of claimed $994,984.50 average revenue across entire system
  3. 03MINORTiered royalty structure (10%-8%) implies franchisor revenue heavily dependent on franchisee sales success, creating potential misalignment if units underperform
  4. 04MINORSignificant capital investment range ($107,710-$153,242) relative to only 2 operating units raises questions about unit economics and franchisee profitability claims
  5. 05MEDUnknown unit growth rate signals potential stagnation; no disclosed expansion pipeline or franchisee recruitment success metrics

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.