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A53/100FDD 2025

Midtown Chimney Sweeps — Litigation & Risk

Other · 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
53 / 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
2
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$275K
Avg loan size
$138K
Participating lenders
1

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

What drove the 53/100 rating

Risk Score Breakdown

  1. 01MINORNo Item 19 (net income) disclosure prevents ROI validation; average revenue of $162k against $73-146k investment suggests tight margins
  2. 02HIGHLitigation history (3 legal actions settled April 2020) involving breach of contract and mark counterfeiting indicates past franchisor-franchisee disputes and enforcement challenges
  3. 03MINORSlow unit growth (8.3% YoY on 39 units = ~3 net new franchises annually) suggests market saturation, recruitment challenges, or franchisee dissatisfaction
  4. 04MINOR7% royalty on gross revenues with $250/month minimum creates cash flow pressure on seasonal/weather-dependent chimney sweep business
  5. 05MINORHigh franchise fee ($49,000) represents 67-30% of initial investment with unclear break-even timeline

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.