Elevated Risk
12 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
12
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
47 / 100
FranchiseVerdict composite
Rating
STRONG
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
12
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$1.4M
Avg loan size
$120K
Participating lenders
8
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
Virginia
State whose law governs disputes — relevant if you're not based there
What drove the 47/100 rating
Risk Score Breakdown
- 01HIGHCEO/Chairman has extensive litigation history from Liberty Tax tenure, including securities class actions, DOJ settlement, and California consent order—raises governance and ethical concerns
- 02MEDAverage Net Income not disclosed in FDD Item 19, preventing accurate ROI calculation and hiding potential profitability issues
- 03MINORExplosive unit growth of 366.7% YoY is unsustainable and suggests possible recruitment-driven model rather than organic profitability; typical mature franchises grow 10-25% annually
- 04MINORFranchise fee ($45,000) represents 21.8% of low average revenue ($206,495), creating thin margins before 8% royalty and operating costs
- 05HIGHGoing Concern status indicates financial instability at franchisor level, threatening support infrastructure and system viability
- 06MINOREight lawsuits plus governmental action against leadership create reputational and operational risk; pattern suggests potential compliance issues
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.