Elevated Risk
17 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
17
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
82 / 100
FranchiseVerdict composite
Rating
AVOID
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
11
Government-backed loans issued
Default rate
27.3%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
3 loans
Loans charged off or defaulted
Total loan volume
$818K
Avg loan size
$74K
Participating lenders
9
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
New Jersey
State whose law governs disputes — relevant if you're not based there
What drove the 82/100 rating
Risk Score Breakdown
- 01MINORDeclining unit count (-1.3% YoY) signals system contraction and potential franchisee dissatisfaction
- 02MEDNo disclosed average revenue or net income (missing FTC Item 19) prevents accurate ROI assessment and suggests underperformance
- 03MEDMultiple active antitrust class actions (Moehrl, Burnett, etc.) regarding commission practices create regulatory and reputational risk to franchisees
- 04MINORUnprotected territory exposes franchisees to direct competition from other ERA licensees and internal cannibalization
- 05MINORPending and resolved contract disputes with former franchisees indicate potential franchisor-franchisee relationship issues
- 06MEDHigh investment range ($33K-$447K) combined with 6% royalty on undisclosed revenues creates profitability uncertainty
- 07HIGHTrademark infringement litigation suggests brand IP vulnerabilities that could affect franchisee operations
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.