Bottom line
- Total investment $535K – $2.2M including a $65K franchise fee.
- Average unit revenue of $14.7M/year (median $10.4M). Estimated payback in 1.1 years.
- Rated MODERATE with a risk score of 60/100. SBA loan default rate of 0.0% across 4 loans (below the industry average).
- System contracting at -870% CAGR over 3 years. Investigate whether closures are franchisor-driven (consolidation) or franchisee-driven (economics).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one AR Homes unit return on the cash you put in?
Unlevered ROIC · per unit
129%
Above typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 AR Homes units return on equity?
Equity IRR · 5-yr
21.3%
2.63× MOIC
Year-1 DSCR
4.49×
EBITDA ÷ debt service
Equity required
$95.7M
on $143.8M purchase
Total debt
$48.1M
SBA $5.0M + senior + seller note
Overview
About
AR Homes franchisees operate custom home building and/or renovation businesses, managing construction projects, client relationships, and contractor networks within their assigned service areas. Day-to-day activities likely include project estimation, permit coordination, quality supervision, and client communications. Revenue is generated through home sales or renovation contract fees.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 23 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Moderate-to-high risk investment with unresolved litigation, unprotected territory, opaque financial performance claims, and unclear unit economics in a capital-intensive sector.
Score breakdown · what drove the 60 / 100 rating
- 01HIGHPending litigation (Scott Tate) involving 'aiding and abetting' claims suggests potential franchisor accountability issues beyond standard disputes
- 02MINORNo protected territory in real estate/home building sector creates direct competition risk between franchisees in same market
- 03MINORUnknown unit growth trajectory with only 42 units is concerning—no clarity on system expansion or contraction over past 3-5 years
- 04MINORHigh initial investment range ($535K-$2.19M) paired with undefined Minimum Annual Royalty creates unpredictable cost structure
- 05MINORItem 19 (Financial Performance) absent from disclosure—average revenue ($14.7M) and net income ($1.2M) figures cannot be verified as franchisor-provided
- 06HIGHPrevious litigation settlement (F&S Frame and Trim, 2015) indicates history of contractor/vendor payment disputes, a red flag in construction franchises
- 07MINORRoyalty structure (3.5%-4.25% + undefined minimum) on Adjusted Sales Price creates ambiguity—'adjusted' definition critical to profitability
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
61 numbers
One-time purchase · CSV download · Validation questions included
FDD download
AR Homes · FDD (2025) PDF