B61/100FDD 2022
TheHomeMag — Litigation & Risk
Home Services - Other · FDD Items 3, 4 & 5
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
61 / 100
FranchiseVerdict composite
Rating
MODERATE
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
1
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$150K
Avg loan size
$150K
Participating lenders
1
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
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
Florida
State whose law governs disputes — relevant if you're not based there
What drove the 61/100 rating
Risk Score Breakdown
- 01MINORNo average revenue or net income disclosure (Item 19) prevents ROI validation and benchmarking against $199k-$349k investment
- 02MEDSlow unit growth of 7.7% YoY with only 63 locations suggests limited market traction or franchisee attrition
- 03MINORDual royalty structure (6.5% offline / 15% online) heavily penalizes digital revenue and creates complexity; online penalty may indicate system shift struggling
- 04MEDTwo Sherman Act and Lanham Act antitrust lawsuits (2019, 2021) indicate founder/franchisor competitive disputes, though dismissed favorably
- 05MEDThin investment range ($199k-$349k) with no disclosed profitability metrics creates blind spot for break-even and payback period analysis
- 06HIGHGoing concern status noted in FDD; requires verification of franchisor financial stability and debt load
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.