FranchiseVerdict
Mr. Rooter logo
A45/100FDD 2024

Mr. Rooter — Litigation & Risk

Home Services - Plumbing & HVAC · FDD Items 3, 4 & 5

Back to overview

Moderate — Review

2 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
45 / 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
97
Government-backed loans issued
Default rate
14.3%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
9 loans
Loans charged off or defaulted
Total loan volume
$29.9M
Avg loan size
$308K
Participating lenders
44

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

What drove the 45/100 rating

Risk Score Breakdown

  1. 01MEDNo Item 19 (Average Net Income) disclosed — cannot validate profitability claims or ROI timeline
  2. 02MINORSlow unit growth (2.9% YoY) suggests market saturation or franchisee satisfaction issues in a mature 218-unit system
  3. 03HIGHTwo trademark/IP litigation cases settled in recent history indicate brand protection vulnerabilities and competitive pressure
  4. 04MEDHigh initial investment ($122K–$263K) relative to disclosed average revenue ($1.76M) requires 7%+ gross margin just to break even on franchise fees in year one
  5. 05MINOR10-year term is longer than industry standard (5–7 years), locking franchisees into aging brand IP and limiting exit optionality

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.