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Elevated Risk
29 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
29
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
75 / 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
671
Government-backed loans issued
Default rate
34.7%
vs <3% typical · system-wide
5-yr default rate
50.0%
Defaults
226 loans
Loans charged off or defaulted
Total loan volume
$53.5M
Avg loan size
$80K
Participating lenders
95
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
No
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 75/100 rating
Risk Score Breakdown
- 01MINORSystem declining 3.9% YoY with 1,741 units — indicates market contraction and potential saturation in mobile tool distribution
- 02MEDNo disclosed net income despite $516,708 average revenue — suggests razor-thin margins or significant unreported costs
- 03HIGHMultiple litigation exposures including data breach class action, collection actions against distributors, and independent contractor misclassification claims — indicates operational and legal instability
- 04MINORUnknown royalty structure prevents accurate profitability analysis — lack of transparency is a major red flag
- 05MEDHigh investment range ($104K-$376K) combined with undisclosed net income creates poor ROI visibility and capital at risk
- 06MINORClass action data security incident suggests inadequate systems and potential franchisee liability for customer data loss
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.