NHance: Litigation & Risk
Home Services · FDD Items 3, 4 & 5
Moderate: Review
3 cases disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 3
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 60 / 100
- FranchiseVerdict composite · higher is better
- Rating
- A
- 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
- 5
- Government-backed loans issued
- Charge-off rate
- N/A
- vs 16% franchise average
- 5-yr charge-off rate
- N/A
- Defaults
- N/A
- Loans charged off or defaulted
- Total loan volume
- $4.8M
- Avg loan size
- $251K
- Participating lenders
- 0
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
- 1 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
- MI
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
3 prior actions: (1) NHance v. Amore Contract Services – breach of contract for unpaid royalties, awarded $193,672.71 (May 2025); (2) Torok v. NHance – franchisee claims of misrepresentation, settled April 2019 with $78,000 payment to franchisee; (3) NHance v. Finishline Cabinets – trade secrets/unfair competition, settled July 2024 for $2,000 payment to NHance.
What drove the 60/100 verdict
Risk Score Breakdown
- 01MEDSystem contraction: 18% unit decline YoY (209 to ~171 units) indicates shrinking franchisee base and potential market saturation or operational challenges
- 02HIGHMultiple litigations: Three separate legal actions (unpaid royalties, misrepresentation claims, IP violations) suggest compliance issues, franchisor-franchisee friction, and possible quality control gaps
- 03MEDNo disclosed net income: Absence of Item 19 earnings claim prevents validation of the $625k average revenue claim and obscures true profitability for franchisees
- 04MINORHigh royalty floor: 6% minimum royalty on declining revenue base increases franchisee burden during economic downturns or slow periods
- 05HIGHLitigation pattern: Mix of franchisor enforcement (Amore, Finishline) and franchisee complaints (Torok misrepresentation) suggests systemic relationship issues
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.