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A48/100FDD 2024

Metal Supermarkets — Litigation & Risk

Other · FDD Items 3, 4 & 5

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Moderate — Review

1 case disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
1
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
48 / 100
FranchiseVerdict composite
Rating
STRONG
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
70
Government-backed loans issued
Default rate
14.3%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
6 loans
Loans charged off or defaulted
Total loan volume
$18.4M
Avg loan size
$263K
Participating lenders
39

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
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
New York
State whose law governs disputes — relevant if you're not based there

What drove the 48/100 rating

Risk Score Breakdown

  1. 01MEDNo Item 19 (Average Unit Volume) disclosed — impossible to assess true profitability or ROI at $340K-$592K investment level
  2. 02MINORSlow unit growth (2.5% YoY) suggests market saturation or franchisee struggles in a mature 85-unit system
  3. 03HIGHActive litigation (D.N.J. 2022) alleging non-disclosure of supplier-competitor conflict indicates potential franchisor transparency issues and reputational risk
  4. 04MINORTiered royalty structure (6% → 5% → 3%) creates variable cost burden; low-revenue locations ($140K–$207K sales range) pay highest percentage
  5. 05MEDHigh initial investment ($340K–$592K) with no disclosed net income makes break-even analysis impossible for prospective franchisees

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.