How the Murk Score Works
The Murk Score is a transparency index, not a quality rating. It measures how much useful financial and operational data a franchisor actually discloses in their Franchise Disclosure Document (FDD). Lower is better.
Proprietary methodology developed from analysis of thousands of FDDs.
What Does the Score Mean?
0 to 1
CLEAR
No checks triggered, or only the lightest
2 to 39
MODERATE
Some weighted checks triggered
40 to 64
ELEVATED
More weighted checks triggered
65 to 100
OPAQUE
The most weight of triggered checks
What the Murk Score Evaluates
32 binary checks across 5 pillars. Every check is a yes or no against what the FDD discloses. The thresholds are our own lines, not the FDD’s.
Disclosure Completeness
“Did the franchisor tell you how much franchisees actually make?”
Does the FDD provide the financial data a reasonable investor would need? Evaluates the presence, depth, and quality of financial performance representations and audited financial statements.
- •Whether the franchisor provides any financial performance data at all
- •The depth of earnings representations: medians, expenses, sample sizes
- •Whether financial statements are independently audited by a CPA
System Trajectory
“Is the system growing, or are franchisees leaving?”
Is the franchise system growing or shrinking? Analyzes multi-year outlet data and revenue trends for unit decline, franchisee departures above our thresholds, and growth above our 2x line.
- •Multi-year unit growth or decline trends across the system
- •Franchisee departure patterns and their severity
- •Revenue trajectory and growth sustainability signals
- •Franchise system age and operational track record
Franchisor Solvency
“Can the franchisor stay in business long enough to support you?”
Can the franchisor meet its obligations? Examines audit opinions, financial health indicators, balance sheet equity, and bankruptcy disclosures across the corporate family.
- •Audit opinion quality and going concern warnings from independent CPAs
- •Balance sheet health and solvency indicators
- •Bankruptcy history across the franchisor and affiliated entities
Internal Consistency
“Do the numbers in the FDD actually add up?”
Do the numbers in the FDD agree with each other? Cross-checks arithmetic across financial statements and outlet tables, and flags a system of 50 or more outlets that reports no exits in a year.
- •Balance sheet arithmetic: do assets equal liabilities plus equity?
- •Outlet table reconciliation across multiple reporting years
- •Exit counts that report zero across a large system
Litigation
“Are franchisees suing, and how often?”
What does the FDD disclose about lawsuits, government actions, and officer conduct? Every check triggers on concrete facts the franchisor disclosed in their own government-filed document.
- •Government enforcement actions from state AGs or the FTC
- •Franchisee-initiated lawsuit volume and patterns
- •Class actions and officer criminal history disclosures
How a Murk Score Is Computed
- 01.
FDD is uploaded and parsed
The system ingests the full Franchise Disclosure Document and extracts structured data from all 23 required items.
- 02.
Each of the 32 checks is evaluated
Every check produces a binary result: triggered or not triggered. There are no sliding scales, only verifiable facts from the document.
- 03.
Score is computed
Triggered checks contribute to the score based on their materiality. Checks that affect your ability to evaluate the investment carry more weight than minor documentation gaps. The score is capped at 100.
- 04.
Transparency label is assigned
The final score maps to a label: CLEAR, MODERATE, ELEVATED, or OPAQUE, each representing a tier of disclosure quality.
Why Trust the Murk Score?
Verifiable, Not Subjective
Every check is a yes or no against what the FDD discloses. The thresholds are our own lines, not the FDD’s.
Deterministic and Reproducible
The same FDD run through the Murk Score system will always produce the same result. The methodology is rules-based, not dependent on who runs the analysis or when.
Sourced from Public Records
All data comes from Franchise Disclosure Documents filed with state regulators. FDDs are public records available through 13+ franchise registration states. Every finding is traceable to a specific FDD item number.
Not a Replacement for Legal Counsel
The Murk Score surfaces what to ask about. Your franchise attorney tells you what it means for your specific situation. We are a force multiplier for professional due diligence, not a substitute.
How the Paid Report Grades
The paid report leads with the Murk Score. Below it sit four measures, each graded in code against the written lines on this page. No model picks a colour, there is no overall score, and a row's colour is the worst line it crosses. A missing figure never passes a row: the row says it was not graded and why. Rules version 1.4 (2026-10-21); every report states the version it was graded under.
Balance sheet (Item 21)
Minimum inputs: Total assets (above zero) and total liabilities, from our read of the FDD.
| Line | Colour | Why | Whose line |
|---|---|---|---|
| A1. The auditor's report includes a going concern paragraph | RED | The independent auditor states doubt about the company continuing | Not ours: the auditor's, printed in Item 21 |
| A2. The auditor's opinion is adverse or a disclaimer of opinion | RED | The auditor would not vouch for the statements | Not ours: the auditor's |
| A3. Total liabilities exceed total assets | ORANGE | For every dollar of assets on the balance sheet, more than a dollar is owed | Not ours: simple arithmetic, liabilities above assets |
| A4. A net loss for the year, with cash below current liabilities | ORANGE | Losing money, with less cash than the bills due within twelve months | Ours: the pair of facts we flag |
| A5. Liabilities above 80% of assets | ORANGE | More than 80 cents owed per dollar of assets | Ours: the 80% level we flag |
| A6. Liabilities above 50% of assets | YELLOW | More than 50 cents owed per dollar of assets | Ours: the 50% level we flag |
| A7. The FDD states that the franchisor guarantees debt of another entity | YELLOW | A guarantee is not in the balance sheet totals the liabilities line divides, so that line alone cannot read the balance sheet as clear | Ours: we flag a guarantee the FDD states in its own words |
- The Special Risks cover page naming the franchisor's financial condition, and a state's fee deferral, escrow or bond condition, print with the row as facts with their pages. They do not set its colour.
- The current ratio and a current liabilities figure above current assets print as facts with their pages and do not set the colour: few FDDs in our data give both current figures, and the ratio can point the other way from the totals.
- When Item 21 presents another entity's statements (a parent, guarantor or affiliate), the row names that entity and is not graded: its figures and the auditor's lines print as facts, and no line of ours is applied (live run 14).
- A balance sheet that is not audited with an unqualified opinion is described in the auditor's own word (unaudited, reviewed, compiled, qualified), never as audited.
Outlet exits (Item 20)
Minimum inputs: The latest Item 20 year's terminations, non-renewals and ceased operations for franchised outlets, and franchised outlets at the start of the same year, with at least 10 franchised outlets at the start of the year.
| Line | Colour | Why | Whose line |
|---|---|---|---|
| B1. Over the latest 3 FDD years, 12 or more of every 100 franchised units left each year, or 20 or more of every 100 in the latest year, with at least 5 units leaving | RED | Our warning line: 11% of the 393 brands we track are at or above the 3-year line; the typical brand is at 3.3 | Ours: set from the 393 brands we track |
- Exits are Item 20's Terminations, Non-Renewals and Ceased Operations, Other Reasons. Transfers and outlets reacquired by the franchisor are not exits.
- Each year's rate divides by franchised outlets at the start of that year (Item 20's start-of-year count, the prior year's end); the 3-year figure is the units that left over the 3 years over the 3 start counts added.
- Below the line the row is GREEN; there is no middle band.
- Fewer than 10 franchised outlets: not rated. That minimum is ours and only ever withholds a grade.
- The net change in outlets prints as a fact and is not graded.
Matters per outlet (Item 3)
Minimum inputs: All eight Item 3 counts (pending and concluded, each of four kinds) as numbers, total outlets at the end of the latest Item 20 year of at least 10, and a franchisor named in Item 3 that franchises only this brand among the FDDs we hold.
| Line | Colour | Why | Whose line |
|---|---|---|---|
| C1. Matters at or above 15% of outlets | RED | About one matter per 7 outlets | Ours: the 15% level we flag |
| C2. Matters at or above 5% of outlets | ORANGE | One matter per 20 outlets | Ours: the 5% level we flag |
- The count is every matter Item 3 lists, pending and concluded, government actions included, and the row prints the breakdown. A missing count is never read as zero.
- The denominator is total outlets, franchised plus company owned, at the end of the latest Item 20 year (operators, where Item 20 counts territories). Matters are as of the FDD's issuance date.
- When the franchisor named in Item 3 also franchises another brand we hold, its matters cover more outlets than this brand's: not graded.
- Government orders, class actions, Federal Trade Commission matters, officer convictions and a franchisor bankruptcy print as counted facts with pages and never set a colour.
Recurring fees (Item 6)
Minimum inputs: A royalty stated as a percentage of sales and a marketing fund rate as a number (a recorded 0 counts). A flat, per unit, revenue share or no royalty cannot be a percentage of sales and is not graded.
| Line | Colour | Why | Whose line |
|---|---|---|---|
| D1. Royalty plus marketing fund, and any other Item 6 fee charged as a percentage of sales, at or above 11% of sales | ORANGE | Our warning line: about 1 in 8 of the 124 brands whose fees we can total are at or above it; the typical one is at 8.5% | Ours: set from the brands we track |
- This row measures cost, not disclosure quality.
- A royalty that rises with sales is graded on its base rate, the most favourable reading for the brand, and the row says so.
- The technology fee (a dollar amount), a minimum royalty and any required local advertising print beside the total and are not in it.
When a row is not graded
- The FDD does not disclose the figure, or discloses nothing to grade (a fact about the brand).
- Our read of the FDD does not hold the figure (a gap in our data, never the brand's).
- Our rule withholds a grade (fewer than 10 outlets, a shared franchisor entity, a royalty that is not a percentage of sales, another entity's balance sheet).
Frequently Asked Questions
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The Murk Score methodology, including check definitions, weight calibrations, and scoring thresholds, is proprietary to Franchise Sonar and protected as a trade secret. This page describes our approach for transparency purposes. The specific implementation details are not disclosed. The Murk Score is not investment advice and should not be the sole basis for any franchise investment decision. Consult a qualified franchise attorney before investing. © 2026 Franchise Sonar. All rights reserved.
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