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D72/100FDD 2025

Nextcar — Litigation & Risk

Automotive - Repair & Service · 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
72 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

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

What drove the 72/100 rating

Risk Score Breakdown

  1. 01MEDSystem contracting sharply: 29 units with -14.3% YoY decline indicates accelerating collapse
  2. 02MEDNo financial disclosure: Avg revenue and net income not disclosed prevents ROI validation
  3. 03HIGHSignificant litigation: Schwartz case established lifetime royalty-free rights for at least one franchisee, creating precedent risk and potential liability exposure
  4. 04HIGHGoing concern status: False rating suggests franchisor financial distress or operational instability
  5. 05MINORWide investment range: $315K-$1.59M spread indicates inconsistent unit economics or unclear cost structure
  6. 06MINORMinimum royalty structure: $800-$2,400 monthly floor may exceed gross profit on underperforming locations
  7. 07MEDUnknown contract terms: Missing franchise agreement term length prevents long-term commitment assessment

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.