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A50/100FDD 2025

CertaPro Painters — Litigation & Risk

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

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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
50 / 100
FranchiseVerdict composite
Rating
STRONG
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
131
Government-backed loans issued
Default rate
8.8%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
6 loans
Loans charged off or defaulted
Total loan volume
$45.8M
Avg loan size
$349K
Participating lenders
64

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
Pennsylvania
State whose law governs disputes — relevant if you're not based there

What drove the 50/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 6.5% YoY (307 units) signals system contraction and potential market saturation or franchisee dissatisfaction
  2. 02HIGHPending federal litigation (2024) against former franchisee for financial damages and covenant enforcement indicates enforcement challenges and potential franchisor-franchisee conflict
  3. 03HIGHNo Item 19 financial performance representation (Going Concern: False) means prospective franchisees lack verified average revenue/profit benchmarks to validate the $591K avg net income claim
  4. 04MINORTiered royalty structure (6%/5%/4% declining, or minimum) with no specified minimum amount creates unpredictable cash flow obligation; high gross sales requirement implies significant working capital needs
  5. 05MINORInitial investment range of $171K–$320.5K is substantial with $65K franchise fee; ROI timeline unclear without Item 19 data or cost-of-acquisition benchmarks

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.