METAL SUPERMARKETS FRANCHISING AMERICAN INC.

The system's track record shows solid expansion: from 83 locations in 2023 to 91 in 2024—a 10% growth spurt—with 92 franchise units today plus one corporate store, and 14 new units projected. Franchising since 2010 means over a decade of scaling, backed by 61 SBA loans averaging $295K each, though an 8.2% default rate signals moderate risk compared to broader small business averages. Item 19 reveals impressive economics: average gross revenue of $2.06M and median $1.75M per unit, suggesting strong top-line potential for operators in industrial hubs. However, entry costs from Item 7 run $350,500-$612,500 including the $44,500 franchise fee, with ongoing royalties at 6%, 2% ad fund, plus niche fees like $118/month conference, $18-30 email, and $613-812 hosting—pushing total ongoing costs higher than basic royalty/ad structures.

System health metrics are mostly positive with just 2 transfers, but a red flag emerges in litigation: a terminated franchisee sued over alleged fraud, misrepresentation, breach of contract, and franchise law violations tied to undisclosed supplier competition. This echoes potential vulnerabilities in the supply chain model. For investors eyeing $2M+ revenue upside, the growth trajectory and revenue disclosure make it compelling versus broader retail franchises, but weigh the litigation risk and fee creep against SBA financing realities—strong performers likely thrive, yet averages mask variability demanding deep due diligence.