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D72/100FDD 2026

Klappenberger & Son — 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
72 / 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
3
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
$421K
Avg loan size
$140K
Participating lenders
2

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

What drove the 72/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count: 11 total units with -10% YoY contraction indicates system shrinkage and potential market viability issues
  2. 02MEDNo financial disclosure: Average revenue and net income not disclosed in Item 19, preventing franchisee ROI validation and earnings claims substantiation
  3. 03HIGHGoing concern status is FALSE: Suggests financial instability at franchisor level, raising questions about support, marketing fund solvency, and long-term viability
  4. 04MEDHigh initial franchise fee relative to unit count: $47,000 franchise fee with only 11 units indicates limited brand recognition and smaller support infrastructure
  5. 05MINORTiered royalty structure creates misaligned incentives: Lower 4% rate only applies above $1M revenue—a threshold most failing franchisees may never reach
  6. 06MEDExtended 10-year term locks franchisees into struggling system with limited exit flexibility

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.