Coverall: Litigation & Risk
Cleaning & Maintenance · FDD Items 3, 4 & 5
Elevated Risk
18 cases disclosed in FDD Items 3 and 4. Bankruptcy disclosed in Item 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 18
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- Disclosed
- Franchisor or officer bankruptcy
- Verdict score
- 53 / 100
- FranchiseVerdict composite · higher is better
- Rating
- B
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 13
- Government-backed loans issued
- Charge-off rate
- 0.0%
- vs 16% franchise average
- 5-yr charge-off rate
- 0.0%
- Defaults
- 0 loans
- Loans charged off or defaulted
- Total loan volume
- $1.5M
- Avg loan size
- $117K
- Participating lenders
- 9
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
- 1.5 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
- No
- Franchisor can match any purchase offer when you try to sell
- Governing law
- State in which franchise is located (varies by franchisee)
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Extensive litigation history primarily involving franchisee misclassification as independent contractors under various state wage laws (California, Massachusetts, New Jersey). Key settled matters include Awuah/Cooks/AAA Massachusetts settlement ($5.5M). Pending matters include Rivas (California PAGA) and Gonzalez (California). FTC consent decree in 1994 ($100K penalty for disclosure violations.
What drove the 53/100 verdict
Risk Score Breakdown
- 01MINORDeclining unit count (-4.4% YoY) indicates a shrinking franchise system despite 20-year maturity
- 02MINORMultiple active class action lawsuits regarding worker misclassification and wage/hour violations create significant legal and operational risk
- 03MINOR1994 FTC consent decree suggests history of deceptive earnings claims and disclosure violations
- 04MINORNo Item 19 financial disclosure means franchisees cannot verify stated profitability claims independently
- 05MINORUnprotected territory creates direct competition risk and pricing pressure from other franchisees
- 06MEDHigh franchise fee ($40,320) relative to low disclosed investment range ($17,917–$62,908) suggests unclear total startup costs
- 07HIGHGoing Concern flag is FALSE but declining unit economics and litigation suggest potential solvency stress
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.