Lapels
Formerly known as Next Step Franchise Group
Bottom line
- Total investment $41K – $1.7M including a $60K franchise fee, 6.0% ongoing royalty.
- Average unit revenue of $423K/year (median $389K).
- Rated MODERATE with a risk score of 56/100. SBA loan default rate of 0.0% across 50 loans (below the industry average).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Lapels unit return on the cash you put in?
Unlevered ROIC · per unit
5%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Lapels units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$338K
on $1.7M purchase
Total debt
$1.4M
SBA $0.8M + senior + seller note
Overview
About
Lapels operates as a dry cleaning and laundry franchise, with franchisees managing customer-facing operations including garment intake, processing, quality control, and customer service delivery. Day-to-day activities involve staffing operations, managing inventory, handling cleaning equipment, and maintaining service standards across the store location.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 18 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Lapels presents meaningful risk due to stagnant growth, lack of net income transparency, recent litigation history, and royalty structure that may not align with profitability.
Score breakdown · what drove the 56 / 100 rating
- 01MINORStagnant unit growth of only 2.5% YoY with 83 units suggests market saturation or franchisee dissatisfaction
- 02MEDNet income not disclosed in FDD Item 19 prevents accurate ROI calculation on $40,900–$1.7M investment range
- 03HIGHRecent litigation with franchisees (Barros case) over breach of contract and unconscionability indicates franchisor-franchisee disputes
- 04MINORWide investment range ($40,900 to $1.7M) with average revenue of only $423K suggests inconsistent unit economics
- 05MED6% royalty on gross revenue (not net) combined with undisclosed profitability creates cash flow risk
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
83 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Lapels · FDD (2026) PDF