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B59/100FDD 2024

Color World Painting — Litigation & Risk

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

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Lower Risk

No litigation cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
59 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID

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

What drove the 59/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 10% YoY (46 units) indicates system contraction and potential franchisee dissatisfaction
  2. 02MEDNet income not disclosed in Item 19 — inability to assess actual profitability despite $149K avg revenue
  3. 03MINORHigh minimum royalty structure (6% or minimum) creates cash flow risk for lower-revenue locations
  4. 04MINORFranchise fee of $49,500 represents 33% of average revenue in first year, requiring significant ramp time
  5. 05HIGHNo going concern statement suggests franchisor financial stability concerns
  6. 06MINORSmall system size (46 units) limits brand recognition and support infrastructure scalability

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.