FranchiseVerdict
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D73/100FDD 2022

Johnstone Supply — Litigation & Risk

Home Services - Plumbing & HVAC · FDD Items 3, 4 & 5

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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
73 / 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
1
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
$400K
Avg loan size
$400K
Participating lenders
1

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
1 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 73/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 2.7% YoY suggests system contraction and potential market saturation or franchisee struggles
  2. 02MINORNo average revenue or net income disclosure (Item 19) prevents ROI validation and raises transparency concerns
  3. 03MINORWide investment range ($808K–$3.4M, 321% spread) indicates highly variable unit economics and unclear cost structure
  4. 04MINORRoyalty rate unknown despite significant franchise fee ($60K) suggests opaque fee structure
  5. 05MINOR7-year term is relatively short, creating renewal uncertainty and limiting franchisee asset amortization period
  6. 06MEDIndustrial/HVAC supply distribution is capital-intensive with thin margins; high investment coupled with undisclosed profitability is concerning

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.