System4 Franchise Cost, Revenue & Review 2026
- Investment
- $157K – $377K
- Disclosed sales
- $1.8M
- gross sales, not profit
- SBA charge-off
- 0.0%
- on 29 loans
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 and an ongoing 1.0% royalty[2]. 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: B (Above average), an editorial assessment, not investment advice. Run a live ROI scan →
Sources, dates and evidence
FDD issued: · Data extracted: · Last cited check: · Staleness risk: high - issued more than two years ago
Evidence: strong✓ Investment (Item 7)✓ Item 19 status✓ Units and owners (Item 20)✓ SBA loan coverage✓ Litigation (Item 3)✓ Financial statements (Item 21)✓ Franchisor identityhow this is scored6 of 6 headline figures on this page cite a page of the filing.
Overview
- Investment
- $157K – $377K
- 61st pct Cleaning & Ma…
- Avg gross sales
- $1.8M
- Outlet subset29th pct Cleaning & Ma…
- Royalty
- 1.0%
- 0th pct Cleaning & Ma…
- 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 median · 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, 1.0% ongoing royalty.
- RETURNSAverage unit revenue of $1.8M/year (reported for a subset of outlets rather than the whole system).
- RISKVerdict B (Above average), 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).
- GROWTHPositive: net +2 franchised outlets in the latest year (3 opened, 0 closed) (Item 20).
- 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
- $12.5M
- vs $7.9M 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 58% above 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
- 1.0%
- Tiered by sales volume · typical 6–8%
- Ad fund
- No marketing/advertising fund contribution required; fran…
- Total fee load
- 1.0%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 1.0% of gross sales |
| 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 243% above the cleaning & maintenance norm.
Reported for a subset of outlets rather than the whole system
Source: FDD 2022 · Item 19
Single-unit · not modelled
Returns at a glance
An FDD discloses gross sales, not profit, and the operating costs that turn one into the other are in no filing. We publish no modelled return for System4 until someone supplies them — yours, in the models below.
—
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for ad fund rate, COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
Total invested capital · disclosed
$302K
Item 7 initial investment plus working capital, as filed — the one figure here that needs no assumption.
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, read against the 30–60% reference band · Yale SOM, Post-MBA Path Exhibit 2 (2023). Below that band a passive index fund likely outperforms; above it the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses, and it is the top line only — gross sales are not profit. No FDD discloses the operating costs that turn one into the other, so those fields start empty and nothing is modelled until you supply them from your own 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?
Illustrative category typicals — not sourced to any filing, survey or sample. Replace them with figures from franchisee validation calls before you rely on the output.
Unlevered ROIC · per unit
Your modelled return on total invested capital, before any debt financing.
—
An FDD discloses gross sales, not profit. We hold no sourced figure for ad fund rate, COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
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%.
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for ad fund rate, COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
A 25-unit return is built on a per-unit EBITDA. Fill in the operating costs in Model A above and this model runs on that figure, or take the whole scenario to the full ROI workbench, where the portfolio and LBO models accept your own per-unit economics directly.
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
- gross sales
- Sample size
- 39 outlets
- vs category median 32
- Range (low → high)
- $181K→$15.7MCited, not corroborated — printed on page 35 of the 2022 FDD. Nothing else in our record independently restates or re-derives it.
- 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 191 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 median of 8.3%.
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 medians
How System4 Compares
Category median of published Cleaning & Maintenance brands that report the figure; the middle half spans the 25th to 75th percentile and n counts the brands behind it. Medians are used because a few very large systems pull an average far from the typical brand. Revenue is disclosed gross sales, not profit.
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
- N/A
- 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
Last fiscal year · Item 20 exits and transfers
- Terminated
- 0
- Not renewed
- 0
- Transferred
- 5
- Reacquired
- 0
- Franchisor bought back
- Signed, not yet open
- 0
- 0.00 per open outlet · Item 20 Table 5
- Projected new
- 7
- Franchisor's next-year forecast
- 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.
Where the owners are · Item 20 owner list
37 current owners across 26 states.
- CA 5
- FL 3
- TX 3
- AZ 2
- NV 2
- PA 2
- AL 1
- AR 1
- CO 1
- CT 1
- DE 1
- GA 1
- +14 more states
Counts only, from the list the franchisor prints in Item 20. Names and phone numbers are for your own due diligence and are not shown here.
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%
- on 29 loans · 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.
Lender network · 7(a) + 504
SBA Lending Report
Full lending analysis for System4 from SBA 7(a) FOIA data.
- Principal loss rate
- 0.0%
- Avg SBA guarantee
- 81%
- Avg interest rate
- 7.47%
- Lender concentration
- 31.0%
- Job velocity
- 1.9 per $100K
- NAICS benchmark
- 16.8%
- NAICS 561720
- Jobs supported
- 173
Top SBA lendersTop lender holds 31% of loans
| # | Lender | Loans | Volume | Default % |
|---|---|---|---|---|
| 1 | Stearns Bank National Association | 9 | $1.6M | 0.0% |
| 2 | United Midwest Savings Bank National Association | 7 | $1.1M | 0.0% |
| 3 | Citizens Bank | 6 | $2.2M | 0.0% |
| 4 | Celtic Bank Corporation | 4 | $600K | 0.0% |
| 5 | HomeTrust Bank | 1 | $2.1M | N/A |
| 6 | Newtek Small Business Finance, Inc. | 1 | $1.1M | N/A |
| 7 | LendingClub Bank, National Association | 1 | $292K | 0.0% |
Geographic failure vector
| State | Loans | Defaults | Rate |
|---|---|---|---|
| FLFlorida | 6 | 0 | 0.0% |
| CACalifornia | 4 | 0 | 0.0% |
| TNTennessee | 3 | 0 | 0.0% |
| TXTexas | 3 | 0 | 0.0% |
| ILIllinois | 2 | 0 | -- |
| ALAlabama | 1 | 0 | -- |
| ARArkansas | 1 | 0 | 0.0% |
| COColorado | 1 | 0 | -- |
| KYKentucky | 1 | 0 | -- |
| MAMassachusetts | 1 | 0 | -- |
SBA 7(a) lending trend
Borrower profile
Source: SBA 7(a) + 504 FOIA loan-level data, matched by FranchiseVerdict
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)
Subject: the franchisor is a named party (defendant).
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)
Supplier relationship · Items 8 & 16
- Franchisor sells you products: Yes
- Kickbacks from required suppliers: No
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: Yes
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 | Exclusive territory |
| Protected territory | Yes |
| Exclusive territoryℹ | 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
- Site selection
- Franchisor provides general criteria; franchisee selects office site within approved territory
- Franchisor financing
- Offered
- Item 10
- 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
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.
Who owns System4?
System4 is franchised by System4, LLC. Its parent company is Franchise Service Concepts, LLC. Source: FDD Item 1, 2022 filing.
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 B-grade franchise with a verdict score of 68 out of 100 (higher is better). The grade is a deterministic score built from six weighted dimensions — financial health, unit economics, unit growth, scale, legal, and transparency — then calibrated against SBA loan charge-off rates and FDD age. Transparency is one of the six, so a filing that discloses less scores lower on that dimension than one that discloses more. 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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If you represent System4, you can request corrections or provide updated information.
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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.