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F94/100FDD 2025

ZIPS Cleaners — Litigation & Risk

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

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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
94 / 100
FranchiseVerdict composite
Rating
AVOID
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
15
Government-backed loans issued
Default rate
100.0%
vs <3% typical · system-wide
5-yr default rate
100.0%
Defaults
2 loans
Loans charged off or defaulted
Total loan volume
$13.7M
Avg loan size
$913K
Participating lenders
10

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Not required
You retain the right to sue in court
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 94/100 rating

Risk Score Breakdown

  1. 01MEDNo Item 19 (Financial Performance Representations) disclosed — cannot independently verify the $1.26M average revenue and $368K net income claims
  2. 02MINORSlow unit growth of 6.1% YoY suggests market saturation or franchisee struggles in a mature 72-unit system
  3. 03MEDHigh initial investment ($761K–$1.2M) combined with 6% royalties creates significant breakeven pressure; net margin of only 29% leaves limited cushion
  4. 04HIGHGoing Concern status is FALSE — this is atypical reporting that raises questions about financial transparency and corporate stability
  5. 05MINORDry cleaning is a declining industry sector with structural headwinds (declining formal wear usage, environmental concerns, changing consumer habits)

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.