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B55/100FDD 2024

The Cleaning Authority — Litigation & Risk

Cleaning - Commercial & Janitorial · FDD Items 3, 4 & 5

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Moderate — Review

2 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
2
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
55 / 100
FranchiseVerdict composite
Rating
MODERATE
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
70
Government-backed loans issued
Default rate
15.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
6 loans
Loans charged off or defaulted
Total loan volume
$19.1M
Avg loan size
$273K
Participating lenders
28

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
Maryland
State whose law governs disputes — relevant if you're not based there

What drove the 55/100 rating

Risk Score Breakdown

  1. 01MINORMinimal system growth (1.4% YoY) with only 224 units suggests market saturation or stagnation
  2. 02MEDNo average net income disclosed in FDD Item 19 prevents verification of profitability claims against $82k-$172k investment
  3. 03HIGHActive litigation by franchisee association (TCAF) regarding marketing funds indicates systemic franchisor-franchisee disputes
  4. 04MINORTiered royalty structure (6%-4%) requires $600k+ revenue to improve margins, creating cash flow pressure in early years
  5. 05HIGHGoing Concern issue (False) is unclear but warrants clarification on franchisor financial stability

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.