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D72/100FDD 2024

Dealer Specialties — Litigation & Risk

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

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Moderate — Review

3 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
3
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
72 / 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
2
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
$355K
Avg loan size
$178K
Participating lenders
2

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

What drove the 72/100 rating

Risk Score Breakdown

  1. 01MEDSystem shrinking rapidly: 24.2% unit decline YoY (73 units) signals franchisee dissatisfaction or failed model
  2. 02MEDNo financial transparency: Average revenue and net income not disclosed in Item 19, making ROI impossible to validate
  3. 03HIGHAggressive litigation history: Three disclosed cases including breach of non-compete claims suggest enforcement disputes and potentially restrictive covenants
  4. 04MINORUnprotected territory: Franchisees face direct competition from other franchisees and company-owned operations
  5. 05MINORComplex, opaque royalty structure: Per-vehicle fees ($0.83 labels + $0.65 clipping + $1.75 photos = $3.23/VIN minimum) create unpredictable margins; $100/lot floor may be insufficient for small operators
  6. 06MINORLow initial investment masks ongoing variable costs: $17,400–$44,900 entry fee is deceptively low given per-vehicle fee structure requiring high volume to justify

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.