D68/100FDD 2025
Fresh Coat — Litigation & Risk
Home Services - Painting · FDD Items 3, 4 & 5
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
68 / 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
22
Government-backed loans issued
Default rate
25.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
2 loans
Loans charged off or defaulted
Total loan volume
$4.2M
Avg loan size
$190K
Participating lenders
17
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
Ohio
State whose law governs disputes — relevant if you're not based there
What drove the 68/100 rating
Risk Score Breakdown
- 01MINORMultiple regulatory settlements involving non-disclosure of officer bankruptcies (Virginia, California, Virginia affiliate) suggesting potential governance/transparency issues
- 02MEDNo Item 19 (Average Unit Volume) disclosed despite $659K average revenue claim, making ROI validation impossible
- 03HIGHAggressive litigation posture: two franchisor-initiated enforcement actions against franchisees signal potential relationship friction
- 04MINORCPA registration compliance violation in California indicates internal controls/compliance gaps
- 05MINORModest unit growth (7.5% YoY) in a 187-unit system suggests market saturation or plateauing demand
- 06MEDHigh initial investment ($81K-$120K) relative to disclosed royalty recovery timeline with no net income transparency
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.