Purosystems: Litigation & Risk
Home Services · FDD Items 3, 4 & 5
Moderate: Review
4 cases disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 4
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 56 / 100
- FranchiseVerdict composite · higher is better
- Rating
- B
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 176
- Government-backed loans issued
- Charge-off rate
- 15.4%
- vs 16% franchise average
- 5-yr charge-off rate
- 8.7%
- Defaults
- 10 loans
- Loans charged off or defaulted
- Total loan volume
- $45.8M
- Avg loan size
- $260K
- Participating lenders
- 60
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
- Florida
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Pending: Born Active, LLC v. PuroSystems (franchisee suit alleging breach of contract, fraud, CA franchise law violations, filed Feb 2026, unresolved). Prior: PuroSystems v. DePaoli (AAA arbitration, unpaid royalties, settled 2022 for $32,702.50). Other Item 3 actions during last fiscal year: PuroSystems v. Katz (AAA, unpaid royalties $62,981.56, settled Oct 2025) and PuroSystems v. Schatz/SB Enterprises (AAA, unpaid royalties $608,935.38, counterclaim for wrongful termination, in discovery).
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.