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D75/100FDD 2024

Aire Serv — Litigation & Risk

Home Services - Plumbing & HVAC · FDD Items 3, 4 & 5

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Elevated Risk

6 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
6
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
75 / 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
88
Government-backed loans issued
Default rate
42.1%
vs <3% typical · system-wide
5-yr default rate
80.0%
Defaults
8 loans
Loans charged off or defaulted
Total loan volume
$19.9M
Avg loan size
$226K
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

What drove the 75/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 4.8% YoY (197 units) suggests system contraction and potential market saturation or franchisee dissatisfaction
  2. 02MEDNet income not disclosed in Item 19 prevents proper ROI analysis; average revenue of ~$1.5M means profitability is unknown
  3. 03HIGHSix litigation events (2 administrative orders + 4 franchisor lawsuits) indicate enforcement issues, non-compete disputes, and collection problems
  4. 04MINORRoyalty rate of 5-7% combined with $45K franchise fee and $107-253K initial investment creates break-even pressure on $1.5M average revenue
  5. 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.