D71/100FDD 2022
The Carpet Chemist — Litigation & Risk
Cleaning - Commercial & Janitorial · FDD Items 3, 4 & 5
Lower Risk
No litigation cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
71 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID
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
Kentucky
State whose law governs disputes — relevant if you're not based there
What drove the 71/100 rating
Risk Score Breakdown
- 01MINOROnly 1 operating unit despite 10-year franchise term indicates system has failed to scale or expand
- 02HIGHNo Item 19 Financial Performance Representation ('Going Concern: False') means franchisor cannot/will not validate the $283k revenue and $242k net income claims with historical data
- 03MEDTiered royalty structure (8% or minimum monthly requirement) is ambiguous — minimum amount not disclosed, creating uncertainty around actual cost burden
- 04MINORHigh investment-to-revenue ratio ($82-121k initial cost vs. $283k average revenue) requires significant ramp-up and assumes the single unit's performance is replicable
- 05MINORFranchise fee ($30k) plus royalties represent 18-20%+ of first-year revenue if new franchisee achieves average performance, leaving thin margins
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.