B60/100FDD 2022
Garage Kings — Litigation & Risk
Home Services - Other · FDD Items 3, 4 & 5
Moderate — Review
2 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
60 / 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
6
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$1.6M
Avg loan size
$271K
Participating lenders
5
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
Delaware
State whose law governs disputes — relevant if you're not based there
What drove the 60/100 rating
Risk Score Breakdown
- 01MEDNet income not disclosed in FDD despite $453K average revenue — inability to assess actual profitability and ROI on $165K-$208K investment
- 02HIGHHistorical litigation in Minnesota and Washington (2019) for unlawful offer/sale of licenses indicates potential compliance issues and regulatory scrutiny
- 03MINORUnprotected territory creates direct competition risk — multiple franchisees can operate in same area, fragmenting the $453K average revenue
- 04MINOR6% royalty on gross revenue (not net) is standard but painful if net margins are thin — critical to validate actual take-home profitability
- 05MED27.8% YoY unit growth is moderate but only 23 total units suggests small, young system with limited stability and support infrastructure
- 06MED10-year term is long; combined with unprotected territory and undisclosed profitability, creates exit risk if unit economics deteriorate
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.