B61/100FDD 2023
American Leak Detection — Litigation & Risk
Home Services - Plumbing & HVAC · FDD Items 3, 4 & 5
Lower Risk
No litigation cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
61 / 100
FranchiseVerdict composite
Rating
MODERATE
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
20
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$7.4M
Avg loan size
$371K
Participating lenders
13
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
3 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
State of Operating Territory
State whose law governs disputes — relevant if you're not based there
What drove the 61/100 rating
Risk Score Breakdown
- 01MEDUnit count declined 11.8% YoY (146 → ~129 units), indicating system contraction and potential franchisee struggles
- 02MINORNo average revenue or net income disclosure (Item 19) prevents realistic ROI assessment and profitability validation
- 03MINORWide investment range ($76.7K–$259.5K) suggests inconsistent territory valuations and unclear initial capital requirements
- 04MINORTiered royalty structure (10%→6%) creates opaque earnings projections and incentivizes aggressive revenue claims
- 05MINOR5-year term is relatively short for service-based franchise requiring customer relationship rebuilding
- 06HIGHNo litigation disclosure provided, though absence doesn't confirm clean history—requires independent verification
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.