Aire Serv: Litigation & Risk
Home Services · FDD Items 3, 4 & 5
Moderate: Review
2 cases disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 2
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 40 / 100
- FranchiseVerdict composite · higher is better
- Rating
- C
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 111
- Government-backed loans issued
- Charge-off rate
- 30.0%
- vs 16% franchise average
- 5-yr charge-off rate
- 80.0%
- Defaults
- 9 loans
- Loans charged off or defaulted
- Total loan volume
- $24.6M
- Avg loan size
- $222K
- Participating lenders
- 19
FDD Items 5, 6 & 17: What You Give Up
Contract Risk Indicators
- Mandatory arbitration
- Not required
- You retain the right to sue in court
- 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
- Texas
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
During FY2025, Franchisor initiated 1 suit to enforce dispute resolution procedures (Waldstein HVAC) and has 1 pending suit to enforce a covenant not-to-compete (GMAN Air). No suits were filed against the Franchisor. A 2017 Consent Order involving affiliate Window Genie's predecessor (not this Franchisor) resulted in a $5,000 penalty for failing to file advertising with the CA Commissioner.
What drove the 40/100 verdict
Risk Score Breakdown
- 01MINORUnit count declining 4.8% YoY (197 units) suggests system contraction and potential market saturation or franchisee dissatisfaction
- 02MEDNet income not disclosed in Item 19 prevents proper ROI analysis; average revenue of ~$1.5M means profitability is unknown
- 03HIGHSix litigation events (2 administrative orders + 4 franchisor lawsuits) indicate enforcement issues, non-compete disputes, and collection problems
- 04MINORRoyalty rate of 5-7% combined with $45K franchise fee and $107-253K initial investment creates break-even pressure on $1.5M average revenue
- 05MINOR10-year term is lengthy; declining unit trend suggests franchisees may struggle to reach profitability within contract window
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.