Rent-A-Wreck: Litigation & Risk
Automotive · FDD Items 3, 4 & 5
Elevated Risk
1 case disclosed in FDD Items 3 and 4. Bankruptcy disclosed in Item 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 1
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- Disclosed
- Franchisor or officer bankruptcy
- Verdict score
- 63 / 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
- 29
- Government-backed loans issued
- Charge-off rate
- 3.8%
- vs 16% franchise average
- 5-yr charge-off rate
- 0.0%
- Defaults
- 1 loans
- Loans charged off or defaulted
- Total loan volume
- $5.5M
- Avg loan size
- $191K
- Participating lenders
- 25
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
Extracted from FDD Item 3
Litigation Detail
David Schwartz v. JJF Management Services, Inc., Rent-A-Wreck of America, Inc., and Bundy American, LLC. U.S. District Court for the District of Maryland. Dispute over wrongful franchise termination and exclusive territory rights. Multiple appeals and retrials. Final judgment in 2015 favored franchisor. Subsequent contempt finding in 2017 regarding reservation diversion.
What drove the 63/100 verdict
Risk Score Breakdown
- 01MEDPredecessor Bundy American/RAWA Chapter 11 filed 2017, dismissed 2018; current President and Treasurer were officers of those entities
- 02MINORContempt finding requiring $83,440.80 payment to franchisee Schwartz
- 03MINORNegative net growth -7.8% on a small 48-unit base
- 04MINORModest financials: net worth $2.1M, revenue $1.9M
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.