Elevated Risk
11 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
11
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
81 / 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
73
Government-backed loans issued
Default rate
21.5%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
14 loans
Loans charged off or defaulted
Total loan volume
$8.7M
Avg loan size
$119K
Participating lenders
28
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
Ohio
State whose law governs disputes — relevant if you're not based there
What drove the 81/100 rating
Risk Score Breakdown
- 01HIGHActive litigation involving misclassification claims and securities violations suggests systemic franchisor practices may expose franchisees to legal liability
- 02MINORDeclining unit count (1.2% YoY contraction) indicates system-wide performance deterioration and potential franchisee churn
- 03HIGHGoing concern status is FALSE, signaling the franchisor may lack financial stability or operational viability
- 04MINORNo Item 19 (average revenue/income disclosure) prevents validation of stated investment returns and profitability claims
- 05MINORUnprotected territory creates direct competition risk from other Mac Tools franchisees in same market
- 06MINORFixed $1,200 annual royalty structure may mask true profitability if revenue disclosure is withheld intentionally
- 07MINORHistory of labor code violations and breach of warranty settlements indicates recurring compliance and performance gaps
- 08MINORLow franchise fee ($8,000) relative to total investment ($137k-$418k) suggests high equipment/inventory requirements with unclear ROI
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.