System4Franchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
FranchiseVerdict summary · 2026
A System4 franchise requires a total initial investment of $157K – $377K, including a $125K 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]. Verdict grade: A. Run a live ROI scan →
Data last verified June 18, 2026 · figures per the 2022 FDD issuance
Overview
- Investment
- $157K – $377K
- 60th pct Cleaning & Ma…
- Avg gross sales
- $1.8M
- 48th pct Cleaning & Ma…
- Royalty
- 1.0%
- 0th pct Cleaning & Ma…
- Units
- 55
- 46th pct Cleaning & Ma…
- SBA default
- 0.0%
- system-wide median varies by category
Quick verdict · Cleaning & Maintenance · color = vs category peers
Green = >15% above Cleaning & Maintenance avg · No shading = within ±15% · Red = >15% below avg · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Each dollar invested generates 6.9x in gross revenue, well above the typical 1.5-2.5x range.
Only 0.0% of 29 SBA loans charged off, well below the 16% franchise average.
12 legal cases disclosed in the FDD. Read Item 3 before signing.
Bottom line
- Total investment $157K – $377K including a $125K franchise fee, 1.0% ongoing royalty.
- Average unit revenue of $1.8M/year (median $1.5M).
- Verdict A (Top Quintile) with a risk score of 10/100. SBA loan charge-off rate of 0.0% across 29 loans (well below the franchise average, based on all SBA 7(a) franchise lending, 2010–2024).
- 12 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
- Legal entity
- System4, LLC
- Parent company
- Franchise Service Concepts, LLC
- Incorporated in
- OH
- 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
System4 franchisees operate a service-based business model (specific service category not detailed here). Franchisees manage daily operations, likely including client acquisition, service delivery or fulfillment, staff management (if applicable), and revenue reporting under the System4 brand and operational system.
- CEO
- Phillip W. Kubec
- Headquarters
- OH
- Founded
- 2004
- FDD year
- 2022
- States available
- 34
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.
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
$277K
15.0% margin
Unlevered ROIC
92%
EBITDA / total invested capital
Payback
13 mo
cash-on-cash, unlevered
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $157K – $377K
- Near category avg vs category
- Liquid capital req'd
- $20K – $50K
- Near category avg vs category
- Franchise fee
- $125K – $300K
- Below avg, review vs category
- Royalty
- 1.0%
- Gross Sales · typical 6–8%
- Ad fund
- -n/d
- 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.
Financial Performance
- Avg gross sales
- $1.8M
- Per unit, per year
- Median gross sales
- $1.5M
- Item 19 type
- Actual Revenues
- Sample size
- 39 units
- vs category median 31
- Range (low → high)
- $181K→$15.7M
- Cohort dispersion (min → max)
- Transparency
- 4 / 5
- vs category median 4 / 5 · typical
Compared against 204 Cleaning & Maintenance brands
Revenue is 6.9x the investment midpoint. At typical franchise margins, this suggests a payback under 3 years.
vs Cleaning & Maintenance averages
How System4 Compares
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
- 5
- Corporate units in the system
- % franchised
- 91%
- vs corporate-owned
- Net growth (yr3)
- +3.8%
- Net unit change last year
- 3-yr CAGR
- +10.2%
- Compounded over last 3 years
3-year detail · Item 20
- Transfers (3yr)
- 5
- 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
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.
Risk analysis
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
System4 presents high litigation and regulatory risk, undisclosed profitability metrics, stagnant unit growth, and compliance violations—unsuitable for risk-averse investors without extensive franchisee reference validation.
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 10 / 100 rating
- 01MINORMultiple class action lawsuits involving employee misclassification and wage violations suggest systemic operational or contractual issues affecting franchisee profitability and compliance risk
- 02MEDSEC consent order with Maryland Securities Commissioner indicates regulatory violations in sub-franchise sales, raising concerns about corporate governance and franchise disclosure practices
- 03MEDNet income not disclosed in FDD Item 19 prevents validation of the $1.85M average revenue claim and makes ROI analysis impossible; combined with 3.8% YoY unit growth (minimal), suggests franchisees may not be achieving profitable returns
- 04MINORSlow unit growth (55 units, only 3.8% YoY expansion) in a 20-year-old system indicates market saturation, weak recruitment, or franchisee dissatisfaction
- 05MEDHigh franchise fee ($125,000) plus startup costs up to $377,000 creates significant capital requirement with unproven payback period due to missing profitability data
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 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
38 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. The median is $1.5M. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
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 49 franchised units and 5 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 risk score of 10 out of 100, 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.
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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.