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D72/100FDD 2024

Ace Hardware Painting Services — Litigation & Risk

Home Services - Painting · FDD Items 3, 4 & 5

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Moderate — Review

3 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
3
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

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
2
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$750K
Avg loan size
$375K
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
Colorado
State whose law governs disputes — relevant if you're not based there

What drove the 72/100 rating

Risk Score Breakdown

  1. 01MINOROnly 3 operating units with unknown growth trajectory suggests minimal system traction and high failure risk
  2. 02HIGHParent company litigation history includes fraud and disclosure violation allegations, creating reputational and legal exposure
  3. 03MEDNo average revenue or net income disclosure (missing Item 19) prevents ability to validate ROI on $89k-$153k investment
  4. 04MINORHigh royalty burden at 6% with no performance benchmarks or profitability thresholds for franchisees
  5. 05HIGHGoing Concern status as 'False' indicates potential financial instability at corporate level
  6. 06MEDExtremely small franchise base (3 units) with 10-year commitment creates concentration risk and limited peer support

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.