D76/100FDD 2023
CleanNet USA — Litigation & Risk
Cleaning - Commercial & Janitorial · FDD Items 3, 4 & 5
Elevated Risk
13 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
13
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
76 / 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
1
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
$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
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
No
Franchisor can match any purchase offer when you try to sell
Governing law
Virginia
State whose law governs disputes — relevant if you're not based there
What drove the 76/100 rating
Risk Score Breakdown
- 01MINORSystem declining 6.5% YoY (1296 to ~1211 units) indicates shrinking franchise base and potential saturation or dissatisfaction
- 02HIGHMultiple active litigation cases involving misclassification of franchisees as independent contractors raise legal/classification risk and suggest potential reclassification liability
- 03MINORMaryland Securities Division consent order regarding earnings representations and disclosure documentation indicates prior regulatory violations and credibility concerns
- 04MEDNo average revenue or net income disclosed in FDD Item 19—impossible to assess actual unit economics or franchisee profitability
- 05MINORUnprotected territory creates direct competition risk; franchisees can be undercut by other CleanNet franchisees in same geographic area
- 06MINOR10% royalty on gross billings (not net profit) is aggressive; royalties paid regardless of profitability, increasing franchisee financial stress
- 07HIGHWage and hour litigation suggests operational model may pressure franchisees to misclassify their own employees or violate labor laws
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.