Elevated Risk
10 cases disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 10
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 51 / 100
- FranchiseVerdict composite · higher is better
- Rating
- B
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 612
- Government-backed loans issued
- Charge-off rate
- 17.4%
- vs 16% franchise average
- 5-yr charge-off rate
- 35.7%
- Defaults
- 76 loans
- Loans charged off or defaulted
- Total loan volume
- $226.5M
- Avg loan size
- $370K
- Participating lenders
- 140
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
- 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
- NC
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Two franchisor-initiated actions against former franchisees (both concluded/settled). Three pending shareholder derivative/securities class actions against parent Driven Brands Holdings. Three concluded franchisee actions against franchisor/affiliates (including settlement for $5.5M to Maaco from franchisee, $100K paid by MAA to franchisees, $675K paid by MAA). One Canada affiliate action (settled CAN$500K). One Arby's affiliate state AG settlement.
What drove the 51/100 verdict
Risk Score Breakdown
- 01MINORDeclining unit count (-3.5% YoY) signals system contraction and market saturation concerns
- 02MINORNo average net income disclosure prevents ROI validation despite $196k-$4M investment range
- 03HIGHMultiple active litigations including shareholder derivative and securities class actions create franchisor stability uncertainty
- 04MINORNo protected territory combined with 363 competing units increases cannibalization risk
- 05MED8% royalty on $1.6M average revenue = $128k annual royalty burden with undisclosed profitability
- 06HIGHGoing concern status is FALSE but pending securities litigation suggests financial/operational stress at parent level
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.