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A41/100FDD 2026

HomeSmiles — Litigation & Risk

Home Services - Other · 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
41 / 100
FranchiseVerdict composite
Rating
STRONG
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
26
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$4.8M
Avg loan size
$185K
Participating lenders
4

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

What drove the 41/100 rating

Risk Score Breakdown

  1. 01MINORExtreme unit growth (366.7% YoY) suggests either aggressive recruitment or system instability—unsustainable expansion raises retention/profitability concerns
  2. 02MINORMinimum monthly royalty fee structure (greater of 6% or minimum) may be onerous for franchisees in slower markets and creates cash flow risk
  3. 03HIGHGoing Concern = False is absent/unclear; lack of transparency on franchisor financial health is a major red flag
  4. 04MINORHigh franchise fee ($59,500) combined with wide investment range ($148k-$202k) and aggressive royalty structure creates elevated break-even pressure
  5. 05MEDNo Item 19 (Earnings Claim Document) disclosed—cannot independently verify if $205k average net income is achievable or realistic
  6. 06HIGHRapid expansion without disclosed litigation may indicate emerging disputes or franchisee dissatisfaction not yet surfaced in legal filings
  7. 07MINORWide investment range spread ($54k delta) suggests inconsistent territory setup costs or undefined support/infrastructure scaling

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.