Elevated Risk
14 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
14
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
66 / 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
49
Government-backed loans issued
Default rate
5.6%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$21.8M
Avg loan size
$445K
Participating lenders
28
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
California
State whose law governs disputes — relevant if you're not based there
What drove the 66/100 rating
Risk Score Breakdown
- 01HIGHActive litigation involving fraud allegations and franchise law violations with regulatory consent orders indicating disclosure compliance failures
- 02HIGHGoing concern status is FALSE, suggesting potential financial instability at corporate level
- 03MINORSlow unit growth of only 3.8% YoY with 192 units indicates stagnation or market saturation challenges
- 04MEDNo Item 19 (average net income) disclosed despite $488,615 average revenue—prevents ROI validation and suggests weak unit economics
- 05MINORHigh initial investment ($529K-$826K) combined with 7% royalty creates significant financial burden with unproven profitability
- 06MINORRegulatory consent orders demonstrate documented failures in franchise disclosure compliance and business practice standards
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.