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D68/100FDD 2023

AAMCO — Litigation & Risk

Automotive - Repair & Service · FDD Items 3, 4 & 5

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Elevated Risk

23 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
23
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
68 / 100
FranchiseVerdict composite
Rating
CAUTION
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
456
Government-backed loans issued
Default rate
30.9%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
116 loans
Loans charged off or defaulted
Total loan volume
$123.2M
Avg loan size
$270K
Participating lenders
139

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

What drove the 68/100 rating

Risk Score Breakdown

  1. 01MEDSystem contracting at -1.4% YoY with 560 units suggests market saturation or operational challenges in core transmission repair business
  2. 02HIGHSignificant litigation history including two pending consumer fraud allegations, concluded franchisee disputes over misrepresentation, and 10 franchisor enforcement actions in 2022-2023 indicate systemic relationship issues
  3. 03MINORNo Item 19 (average net income) disclosure despite $937K average revenue prevents ROI validation; 7.5% royalty on gross receipts with unknown profitability creates opaque financial picture
  4. 04HIGHGoing Concern status is FALSE, which is concerning for a 560-unit franchise and suggests potential franchisor financial instability or operational distress
  5. 05MINORNo protected territory with declining unit count increases cannibalization risk and competitive pressure on unit-level economics
  6. 06MEDHigh cumulative investment ($234.8K-$353.2K) relative to undisclosed net income creates unfavorable risk-reward asymmetry

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.