FranchiseVerdict
Mr. Appliance logo
F87/100FDD 2025

Mr. Appliance — Litigation & Risk

Home Services - Other · FDD Items 3, 4 & 5

Back to overview

Moderate — Review

4 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
4
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
87 / 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
134
Government-backed loans issued
Default rate
46.7%
vs <3% typical · system-wide
5-yr default rate
44.4%
Defaults
28 loans
Loans charged off or defaulted
Total loan volume
$25.5M
Avg loan size
$190K
Participating lenders
27

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

What drove the 87/100 rating

Risk Score Breakdown

  1. 01MEDSystem contracting sharply: -4.6% unit decline YoY suggests deteriorating franchisee performance and retention
  2. 02HIGHGoing concern status is FALSE, indicating potential financial instability at franchisor level
  3. 03HIGHMultiple litigation cases including fraud allegations (KB Industries et al.) and breach of contract disputes signal operational/support conflicts
  4. 04MINORNo Item 19 (financial performance) disclosure prevents validation of $116.5K-$214.8K investment ROI claims
  5. 05MINORAdministrative compliance violations in California and Kansas demonstrate regulatory and operational control issues
  6. 06MINORRelatively high franchise fee ($63,750) combined with 5-7% royalties creates high break-even threshold for declining system

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.