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F80/100FDD 2026

Chem-Dry — Litigation & Risk

Cleaning - Commercial & Janitorial · FDD Items 3, 4 & 5

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Elevated Risk

6 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
6
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
80 / 100
FranchiseVerdict composite
Rating
AVOID
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
98
Government-backed loans issued
Default rate
29.7%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
27 loans
Loans charged off or defaulted
Total loan volume
$10.8M
Avg loan size
$110K
Participating lenders
57

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

What drove the 80/100 rating

Risk Score Breakdown

  1. 01MEDSystem contraction: 12.5% unit decline YoY indicates accelerating franchisee departures and loss of confidence
  2. 02MINORNo financial disclosure: Franchisor refuses to disclose average net income despite $319k average revenue, suggesting profitability concerns
  3. 03HIGHAggressive litigation posture: Franchisor actively pursuing breach and IP claims against franchisees; three prior trademark/covenant disputes indicate systemic relationship deterioration
  4. 04MINORUnprotected territory: No exclusive territory protection creates direct competition risk between franchisees and corporate locations
  5. 05MINORLow royalty relative to upfront investment: $491/month on $77.6k-$248k investment (3.6-7.5% annually) suggests weak unit economics may not justify initial capital
  6. 06MINORPending arbitration over program changes: Active dispute regarding franchisor-mandated operational changes signals potential forced costs or compliance burdens
  7. 07MINORShort 5-year term: Renewal uncertainty combined with declining system size increases reinvestment risk

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.