Moderate — Review
2 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
2
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
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
114
Government-backed loans issued
Default rate
18.6%
vs <3% typical · system-wide
5-yr default rate
25.0%
Defaults
8 loans
Loans charged off or defaulted
Total loan volume
$36.9M
Avg loan size
$324K
Participating lenders
42
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
Minnesota
State whose law governs disputes — relevant if you're not based there
What drove the 59/100 rating
Risk Score Breakdown
- 01MEDNo Item 19 (Average Unit Volume) disclosed — cannot verify $478k average revenue claim or actual profitability
- 02HIGHAffiliate litigation (The Bar Method) involving unregistered franchise sales in multiple states raises compliance concerns about franchisor's legal practices
- 03MINORNet income completely withheld — inability to calculate actual ROI on $339k–$646k investment with only 6% royalty floor
- 04MINORModest unit growth (10.6% YoY) combined with 167-unit base suggests potential market saturation or slower expansion than claimed
- 05MINOR6-year term is shorter than industry standard (10 years), creating renewal risk and uncertainty for long-term ROI
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.