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D74/100FDD 2026

Rainbow Restoration — Litigation & Risk

Cleaning - Commercial & Janitorial · 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
74 / 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
203
Government-backed loans issued
Default rate
26.0%
vs <3% typical · system-wide
5-yr default rate
41.4%
Defaults
25 loans
Loans charged off or defaulted
Total loan volume
$51.4M
Avg loan size
$253K
Participating lenders
51

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

What drove the 74/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-0.6% YoY) indicates system contraction despite $1.06M average revenue
  2. 02MEDNo average net income disclosed (Item 19) prevents accurate ROI assessment on $185K-$352K investment
  3. 03HIGHLitigation history shows franchisor actively pursuing franchisees for breach/unpaid fees, suggesting enforcement issues or franchisee distress
  4. 04MINORHigh royalty cap (8%) combined with service-based model creates margin pressure on $1.06M average revenue
  5. 05MINORAdministrative consent order involving predecessor affiliate demonstrates regulatory compliance concerns in advertising/disclosures

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.