System4 Franchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
System4 is a commercial cleaning and facility services franchise providing janitorial and disinfection services to businesses. Franchisees build and manage client accounts and cleaning crews, overseeing scheduling and quality.
FranchiseVerdict summary · 2026
A System4 franchise requires a total initial investment of $157K – $377K, including a $125K – $300K franchise fee. Per the 2022 FDD, average unit revenue was $1.8M[2]. SBA 7(a) loans show a 0.0% charge-off rate across 29 loans[1]. FranchiseVerdict grade: A (Strongest tier), an editorial assessment, not investment advice. Run a live ROI scan →
Data last verified · figures per the 2022 FDD issuance
Overview
- Investment
- $157K – $377K
- 61st pct Cleaning & Ma…
- Avg gross sales
- $1.8M
- Outlet subset37th pct Cleaning & Ma…
- Royalty
- N/A
- Units
- 55
- 46th pct Cleaning & Ma…
- SBA charge-off
- 0.0%
- % of SBA 7(a) loans not repaid · median varies by category
Quick verdict · Cleaning & Maintenance · color = vs category peers
Green = favorable by >10% vs Cleaning & Maintenance avg · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $157K – $377K including a $125K franchise fee.
- RETURNSAverage unit revenue of $1.8M/year (reported for a subset of outlets rather than the whole system).
- RISKVerdict A (Strongest tier), verdict score 68/100 (higher is better). SBA loan charge-off rate of 0.0% across 29 loans (well below the franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- LEGAL12 litigation matters disclosed in Item 3, higher than typical. Review the summary for patterns (franchisor-initiated vs. franchisee-initiated).
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- System4, LLC
- Parent company
- Franchise Service Concepts, LLC
- CEO title
- President/CEO
- Phillip W. Kubec
- Incorporated in
- Ohio
- HQ
- 4700 Rockside Road, Suite 610, Independence, Ohio 44131
- Auditor
- Cunningham & Associates
- Audited financials
- Franchisor revenue
- $7.9M
- vs $12.5M prior year
Overview
About
- CEO
- Phillip W. Kubec
- Headquarters
- OH
- Founded
- 2004
- FDD year
- 2022
- States available
- 34
Can you afford it, and what does the money buy?
Entry cost runs 15% below the typical cleaning & maintenance franchise.
Source: FDD 2022 · Items 5–7
FDD Item 7 · 2022 filing
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $125K | $125K |
| Working capital (3–6 mo) | $20K | $50K |
| Equipment, build-out, other | $12K | $202K |
| Total initial investment | $157K | $377K |
Source: System4 2022 FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $157K – $377K
- Middle of category vs category
- Liquid capital req'd
- $20K – $50K
- Middle of category vs category
- Franchise fee
- $125K – $300K
- Bottom third — review vs category
- Royalty
- 1% to 6.2% of Gross Sales
- Ad fund
- -n/d
- Total fee load
- 1.0%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Technology fee | $350 |
| Transfer fee | $25K |
| Renewal fee | $10K |
| Total fee load | 1.0% of rev |
A 1.0% total fee load is unusually lean. More of each revenue dollar stays with the franchisee.
What do units actually make?
Average unit sales run 105% above the cleaning & maintenance norm.
Reported for a subset of outlets rather than the whole system
Source: FDD 2022 · Item 19
Single-unit · estimated
Returns at a glance
Indicative numbers using FDD Item 7 / Item 19 inputs and category-benchmarked cost ratios. Full single-unit, 25-unit portfolio, and LBO models (with every input editable to stress-test your own scenario) live on the financials page.
Store EBITDA · annual
$185K
10.0% margin
Unlevered ROIC
61%
EBITDA / total invested capital
Payback
20 mo
cash-on-cash, unlevered
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
What one unit earns on your invested capital
Model A · Single-Unit Return
Computes unlevered return on invested capital (ROIC) for a single franchise unit. The target band for an attractive franchise is 30–60% ROIC. Below that and a passive index fund likely outperforms; above that and the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses. It's the top line only. Operating costs below are category estimates. Override them to match your real lease quote, labor market, and build-out budget.
Returns model · single-unit ROIC
What would one System4 unit return on the cash you put in?
Unlevered ROIC · per unit
Estimated return on your total franchise investment, before any debt financing.
61%
Above the 30–60% band. Verify revenue is per-unit average
What 25 units return when you use SBA financing
Model B · Return on Equity: Debt-Financed Acquisition
Models a 25-unit portfolio acquisition financed with an SBA 7(a) loan. Shows equity IRR (your return on cash invested), DSCR (how safely the cash flow covers debt service), and the capital stack (SBA + seller + equity breakdown).
This is the “search fund” or “entrepreneurship through acquisition” scenario: you buy an existing multi-unit operator, use leverage to amplify returns, and either operate or hire management. The 25-unit size is the typical minimum for an SBA-backed franchise portfolio acquisition to pencil as a full-time income.
What “return on equity” means here: if you put in $500K of your own cash and the business generates enough EBITDA to pay down debt and grow, your equity IRR is the annual return on that $500K, including the value created when you eventually sell. Target IRR for a search fund is typically 25–35%.
Levered LBO scenario · Yale Crease Capital framing
What would 25 System4 units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$1.1M
on $5.5M purchase
Total debt
$4.4M
SBA $2.8M + senior + seller note
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2022 FDD
Financial Performance
Reported for a subset of outlets rather than the whole system
- Avg gross sales
- $1.8M
- Per unit, per year
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- Actual Revenues
- Sample size
- 39
- vs category median 32
- Range (low → high)
- $181K→$15.7M
- Cohort dispersion (min → max)
- Reporting year
- 2021
- Fiscal year the figures cover
- Source filing
- FDD 2022
- Disclosed in the 2022 filing, covering 2021
- Transparency
- 4 / 10
- vs category median 4 / 10 · typical
Compared against 192 Cleaning & Maintenance brands
Revenue is 6.9x the investment midpoint. At typical franchise margins, this suggests a payback under 3 years.
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
Average unit generates $1.8M/year in gross sales. Revenue-to-investment ratio: 6.9x. Reported for a subset of outlets rather than the whole system.
Fee burden
Total ongoing fee load of 1.0% — below the Cleaning & Maintenance average of 9.7%.
Disclosure
Transparency score 4/10 — this franchisor discloses detailed breakdowns (quartiles, segments, or cohort data). Buyers can model unit economics with higher confidence.
Operator retention
System expanding at 10.2% CAGR over 3 years across 55 units — operators are staying and new ones are joining.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Cleaning & Maintenance averages
How System4 Compares
Is the system healthy?
Source: FDD 2022 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 55
- Opened
- 3
- Last reporting year
- Closed
- 0
- Terminated
- 0
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 0.0%
- Company-owned
- 1
- Corporate units in the system
- % franchised
- 98%
- vs corporate-owned
- Net growth (3-yr)
- +10.2%
- Net unit change over 3 years
- 3-yr CAGR
- +10.2%
- Compounded over last 3 years
3-year detail · Item 20
- Opened (3yr)
- 12
- Closed (3yr)
- 0
- Terminated (3yr)
- 0
- Non-renewed (3yr)
- 0
- Transfers (3yr)
- 11
- Reacquired (3yr)
- 0
- Franchisor bought back
- Transfer rate
- 9.1%
- Owners selling to other franchisees
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 26 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 contact records (FDD Item 20). Shows states with at least one current operator on file. Full state registration data (Item 12) will appear on a future FDD refresh.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 29
- Loan volume
- $8.9M
- Median loan
- $150K
- 50th percentile
- Charge-off rate
- 0.0%
- rates vary by category · see methodology
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- 100.0%
- 5-yr charge-off
- 0.0%
- Loans approved 2021+
- Active lenders
- 7
- Defaults
- 0
- Typical loan rate
- 7.5%
- avg rate to borrowers
- Franchised industry avg
- 15.4%
- brand beats franchise avg ↓
- Jobs supported
- 173
- 1.9 per loan
- Lender concentration
- 31%
- top lender's share
Borrower mix: 86% went to startups / new businesses, 14% to established operators
Franchise vs independent — in janitorial services, franchised businesses charge off at 15.4% vs 22.8% for independents — franchising is associated with 32% lower SBA default risk in this category.
Top lenders financing System4 franchisees
Showing 3 of 7 lenders. The full breakdown — every lender, state distribution, interest rates & risk ratings — is in the SBA Lending Report below.
Explore lender portfolios on Bank Reports or regional data on State Reports.
Premium insight
SBA Lending Report
Deep-dive into System4's SBA lending history: lender network, geographic footprint, interest rates, and more.
SBA Lending Report
- Principal loss rate and NAICS industry benchmark
- 7 lenders with concentration factor
- Per-state charge-off rates across 15 states
- Startup risk premium and job creation velocity
- 9-year lending trend
Instant access. No subscription.
With a 0.0% charge-off rate across 29 loans, banks have historically viewed this brand favorably for lending.
What could kill this investment?
SBA loans charge off at 0.0% — 100% below the 16.0% national norm, i.e. lower lender-observed risk.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Positive net worth $2.32M on $12.5M revenue with audited financials and Item 19. However, 12 litigation matters in a 55-unit system include franchisee misclassification/fraud arbitrations (2015-2017) and a 2007 Maryland Securities Commission matter — a meaningful litigation load relative to system size. Elevated litigation is the main concern.
Litigation (Item 3)
Two concluded cases involving System4, LLC: (1) Edson Teles Machado, et al v. System4, LLC and Master Franchisee NECCS, Inc. - purported class action in Norfolk County Massachusetts Superior Court (Civil Action No. 10-00555) alleging breach of franchise agreements, fraud, and employee misclassification. Massachusetts SJC ruled arbitration clause enforceable on April 13, 2015. Case dismissed by AAA on September 14, 2017. (2) Luis Ribeiro v. System4, LLC - AAA arbitration (Case No. 01-15-0003-8637) commenced June 12, 2015. Arbitrator found System4 liable for misclassification on August 23, 2016. Final Award of $78,558.77 issued February 17, 2017. System4 filed Application to Vacate Arbitration Award in U.S. District Court for District of Massachusetts (Civil Action No. 1:17-cv-10455) on March 17, 2017.
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Cunningham & Associates
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Score breakdown · what drove the 68 / 100 verdict
- 01HIGH12 litigation matters in a 55-unit system (high relative load)
- 02HIGHMisclassification/fraud arbitrations + state securities matter
- 03MINORPositive net worth $2.32M, revenue $12.5M
- 04MEDNo bankruptcy or going-concern; Item 19 disclosed
Severity inferred from the FDD text · not a regulatory classification
What are you signing up for?
Ongoing fees run about 1.0% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2022 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 20 years |
|---|---|
| Renewal term | 10 years |
| Allowed renewalsℹ | 1 |
| Territory type | Area defined by county or city boundaries |
| Protected territory | Yes |
| Territory population | 500,000 |
| Online sales rightsℹ | Restricted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Non-compete (years)ℹ | 2 years |
| Non-compete (miles)ℹ | 100 mi |
| Right of first refusalℹ | Yes |
| RoFR response window | 30 days |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Mandatory arbitration | Yes |
| Arbitration location | Cleveland, Ohio |
| Jury trial waiver | Yes |
| Governing law | Ohio |
| Litigation count | 12 |
View Item 3 litigation summary
Two concluded cases involving System4, LLC: (1) Edson Teles Machado, et al v. System4, LLC and Master Franchisee NECCS, Inc. - purported class action in Norfolk County Massachusetts Superior Court (Civil Action No. 10-00555) alleging breach of franchise agreements, fraud, and employee misclassification. Massachusetts SJC ruled arbitration clause enforceable on April 13, 2015. Case dismissed by AAA on September 14, 2017. (2) Luis Ribeiro v. System4, LLC - AAA arbitration (Case No. 01-15-0003-8637) commenced June 12, 2015. Arbitrator found System4 liable for misclassification on August 23, 2016. Final Award of $78,558.77 issued February 17, 2017. System4 filed Application to Vacate Arbitration Award in U.S. District Court for District of Massachusetts (Civil Action No. 1:17-cv-10455) on March 17, 2017.
Items 10, 11
Training & Operations
- Classroom training
- 78 hrs
- On-the-job training
- 67 hrs
- Training location
- Franchisor location and on-site
- Ongoing training
- Required
- Time to open
- 2 mo
- From signing to launch
- POS system
- ServiceSync
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: ServiceSync
Item 20 · call current owners
Franchisee Contacts
37 owners to call
Name · phone · city · state. Extracted from FDD Item 20
FDD download
System4 · FDD (2022) PDF
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a System4 franchise?
The total investment to open a System4 franchise ranges from $157K – $377K, with an initial franchise fee of $125K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do System4 franchise owners earn?
According to Item 19 of the System4 FDD, the average gross sales per unit is $1.8M. Important context: Reported for a subset of outlets rather than the whole system. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
What is Item 19 in the System4 FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the System4 FDD and qualifies whose outlets they describe.
What is System4's franchise failure rate?
Based on SBA 7(a) loan data, System4 has a charge-off rate of 0.0% across 29 loans, meaning 0.0% of franchise loans were charged off. Charge-off rates are one proxy for franchise risk, though they do not capture all closures. This data comes from FOIA-sourced SBA lending records.
How many System4 franchise locations are there?
As of their most recent FDD filing, System4 has 55 total units in the United States, including 54 franchised units and 1 company-owned units. 3 new units were opened in the latest reporting year.
Is System4 a good franchise to buy?
FranchiseVerdict rates System4 as a A-grade franchise with a verdict score of 68 out of 100 (higher is better), based on our analysis of investment costs, revenue data, SBA loan performance, and growth trends. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.