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F79/100FDD 2024

Five Star Painting — Litigation & Risk

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

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Moderate — Review

3 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
3
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
79 / 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
72
Government-backed loans issued
Default rate
34.4%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
11 loans
Loans charged off or defaulted
Total loan volume
$11.4M
Avg loan size
$158K
Participating lenders
16

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Not required
You retain the right to sue in court
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
Texas
State whose law governs disputes — relevant if you're not based there

What drove the 79/100 rating

Risk Score Breakdown

  1. 01MINORStagnant unit growth: Only 1.7% YoY expansion with 234 units suggests market saturation or franchisee struggles
  2. 02MINORNo financial disclosure: Item 19 (average revenues/net income) absent—impossible to validate ROI on $77k-$184k investment
  3. 03MINORPattern of regulatory violations: Three separate consent judgments (2010 Illinois, 2017 California, 2010 Kansas) across corporate and affiliates indicate systemic compliance issues
  4. 04HIGHGoing Concern flag is False but financial opacity combined with slow growth raises sustainability questions
  5. 05MEDHigh 6% royalty rate on undisclosed revenue base creates uncertainty about actual franchisee profitability

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.