A53/100FDD 2024
Servpro — Litigation & Risk
Cleaning - Commercial & Janitorial · FDD Items 3, 4 & 5
Moderate — Review
1 case disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
1
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
714
Government-backed loans issued
Default rate
6.5%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
37 loans
Loans charged off or defaulted
Total loan volume
$301.9M
Avg loan size
$423K
Participating lenders
184
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
Tennessee
State whose law governs disputes — relevant if you're not based there
What drove the 53/100 rating
Risk Score Breakdown
- 01MINORNo Item 19 financial disclosure (avg revenue/net income) prevents ROI validation and comparison to $241k-$302k investment
- 02MINORUnprotected territory creates direct competition risk from other SERVPRO franchisees and company-owned units
- 03HIGHActive litigation over royalty enforcement and trademark suggests compliance/collection issues within franchise network
- 04MINORRoyalty structure ranges 3%-10% with no clarity on how percentage is determined—creates unpredictable profit margins
- 05MINORSlow unit growth (4.2% YoY) in mature 2,202-unit system indicates market saturation or franchisee struggles
- 06MINOR5-year term is shorter than industry standard (typically 10 years), creating renewal uncertainty and reinvestment risk
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.