BAbove average51/100FDD 2026
Mr. Appliance: Litigation & Risk
Home Services · FDD Items 3, 4 & 5
Elevated Risk
3 cases disclosed in FDD Items 3 and 4. Bankruptcy disclosed in Item 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 3
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- Disclosed
- 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
- 134
- Government-backed loans issued
- Charge-off rate
- 20.9%
- vs 16% franchise average
- 5-yr charge-off 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
- Not required
- You retain the right to sue in court
- Jury trial waiver
- Not waived
- 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
- TX
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
2 prior actions (one franchisor as plaintiff for breach/non-compete settled $100K, one predecessor as defendant by former franchisees settled with no payment); 1 affiliate administrative order (Window Genie/CA, $5,000 penalty); 1 fiscal 2025 suit against franchisee for monies and non-compete.
What drove the 51/100 verdict
Risk Score Breakdown
- 01MEDSystem contracting sharply: -4.6% unit decline YoY suggests deteriorating franchisee performance and retention
- 02HIGHGoing concern status is FALSE, indicating potential financial instability at franchisor level
- 03HIGHMultiple litigation cases including fraud allegations (KB Industries et al.) and breach of contract disputes signal operational/support conflicts
- 04MINORNo Item 19 (financial performance) disclosure prevents validation of $116.5K-$214.8K investment ROI claims
- 05MINORAdministrative compliance violations in California and Kansas demonstrate regulatory and operational control issues
- 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.