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Coverall

Coverall North America, Inc.
https://www.coverall.com
1-800-537-3371
350 SW 12 Avenue, Deerfield Beach, Florida 33442

How much does Coverall cost?

Initial Investment Range

$17,917 to $64,048

Franchise Fee

$16,560 to $42,870

The Franchised Business will operate a commercial cleaning franchise utilizing our Coverall Program.

Enjoy our partial free risk analysis below

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Coverall March 31, 2025 FDD Risk Analysis

Free FDD Library AI Analysis Date: July 16, 2025

DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.

1

Franchisor Stability Risks

Start Here
Total: 10
4
1
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor's audited financial statements in Exhibit B reveal a significant and alarming decline in profitability. Net income dropped from over $2 million in 2023 to just $14,000 in 2024. This dramatic decrease raises serious questions about the company's financial health, operational efficiency, and its ability to continue supporting its franchisees effectively. Although a parent company guarantee is provided, such a steep profit erosion is a major risk for you.

Potential Mitigations

  • A franchise accountant should thoroughly analyze the franchisor's financial statements for the last three years, paying close attention to the footnotes and the sharp decline in net income.
  • Discuss the company's financial stability and the parent guarantee's strength with your business advisor.
  • Your attorney can help you formulate questions for the franchisor regarding the reasons for the significant drop in profitability.
Citations: Item 21, Exhibit B

High Franchisee Turnover

High Risk

Explanation

Item 20 data reveals a high rate of franchisee exits and a shrinking system size. In 2024, nearly 600 franchisees left the system through termination, non-renewal, or ceasing operations, representing a churn rate of over 10%. This high turnover is a significant red flag, suggesting potential issues with the business model, franchisee profitability, or the franchisor-franchisee relationship. You could be joining a system that many others are leaving.

Potential Mitigations

  • It is crucial to contact a significant number of former franchisees listed in the FDD to understand their reasons for leaving the system.
  • Analyzing the turnover rates over the past three years with your accountant can provide insight into system stability.
  • Discuss the high turnover rates directly with the franchisor and ask your attorney to help evaluate their explanation.
Citations: Item 20

Rapid System Growth

Low Risk

Explanation

This risk was not identified. The franchise system is not undergoing rapid growth; in fact, the data in Item 20 indicates that the total number of franchised outlets has been decreasing over the past three years. While this avoids risks associated with over-expansion, the decline itself presents different concerns about system health.

Potential Mitigations

  • A business advisor can help you interpret the implications of a shrinking system versus a rapidly growing one.
  • Ask your accountant to analyze how a declining unit count might affect the franchisor's revenue streams and stability.
  • Your franchise attorney should review the FDD for any explanations regarding the decrease in the number of outlets.
Citations: Not applicable

New/Unproven Franchise System

Low Risk

Explanation

This risk was not identified. Coverall North America, Inc. (Coverall) is an established franchisor, having commenced business operations and franchising in 1985, as disclosed in Item 1. Therefore, the risks associated with an unproven or new franchise system are not applicable here.

Potential Mitigations

  • Even with a mature system, consulting a business advisor to understand its current market position is wise.
  • Review the system's recent history in Item 20 with your accountant to assess its current stability despite its age.
  • Your attorney should still review the entire FDD, as established systems can have their own set of complex risks.
Citations: Not applicable

Possible Fad Business

Low Risk

Explanation

This risk was not identified. The commercial cleaning industry is a long-established and essential service sector, not a business model based on a short-term trend or fad. The business opportunity offers services with consistent demand across various economic cycles.

Potential Mitigations

  • A business advisor can help you assess the long-term stability and competitive landscape of the commercial cleaning industry in your local market.
  • Even in a stable industry, it is wise to have your accountant help you create financial projections for various economic scenarios.
  • Consult with your attorney to understand any industry-specific regulations that might impact your business.
Citations: Not applicable

Inexperienced Management

Low Risk

Explanation

This risk was not identified. The executive team profiles in Item 2 of the FDD indicate that the key personnel have extensive and long-term experience both within the commercial cleaning industry and with the Coverall system itself. This suggests a seasoned management team is in place.

Potential Mitigations

  • A business advisor can still help you research the recent performance and reputation of the current management team.
  • When speaking with current franchisees, ask about their direct experiences with the executive team's leadership and support.
  • Your attorney should review Item 3 litigation history for any cases involving the conduct of current management.
Citations: Not applicable

Private Equity Ownership

High Risk

Explanation

As disclosed in Item 1, the franchisor is owned by a private equity firm, Wellspring Capital Management. This ownership structure may introduce risks, as decisions could prioritize short-term investor returns over the long-term health of franchisees. This could manifest as increased fees, reduced support, or a quicker sale of the entire system, potentially changing the nature of your relationship with the franchisor.

Potential Mitigations

  • A business advisor can help you research the private equity firm's history with other franchise brands they have owned.
  • Discussing the ownership structure with current franchisees can provide insight into any changes since the acquisition.
  • Your attorney should review any assignment clauses in the Franchise Agreement that relate to a sale of the company.
Citations: Item 1, FA § 21

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified. Item 1 and Item 21 clearly disclose the parent companies, including CNA Holding Corporation and the ultimate parent, which is controlled by Wellspring Capital Management. Additionally, the FDD includes consolidated financial statements and a performance guarantee from a parent entity, providing financial transparency.

Potential Mitigations

  • An accountant should still review the provided parent company guarantee to understand its scope and any limitations.
  • Your attorney can help clarify the legal relationship between the franchisor and its parent entities.
  • A business advisor can help you assess the overall corporate structure and what it implies for franchisee support.
Citations: Not applicable

Predecessor History Issues

Medium Risk

Explanation

Item 1 details a long and complex history of acquisitions and mergers with various predecessor entities. While disclosed, this history can make it difficult to fully assess the past performance and potential inherited issues of the different systems that have been consolidated into the current Coverall brand. You are investing in a system with a complicated corporate lineage.

Potential Mitigations

  • A thorough review of the predecessor information in Items 1, 3, and 4 with your franchise attorney is important.
  • Asking long-term franchisees about their experience under any previous ownership can provide valuable context.
  • A business advisor can assist in researching the history and reputation of any significant predecessor companies.
Citations: Item 1

Pattern of Litigation

High Risk

Explanation

Item 3 reveals a significant and recurring pattern of litigation against Coverall, including numerous class-action lawsuits. A central theme of these cases is the allegation that franchisees are misclassified as independent contractors when they should be treated as employees. This represents a fundamental and ongoing legal challenge to the company's business model, which could have major implications for the entire system.

Potential Mitigations

  • A franchise attorney must review the litigation history in Item 3 to explain the nature and potential impact of these legal challenges.
  • Discuss the business model's legal risks with your attorney, especially regarding the independent contractor classification.
  • When speaking to other franchisees, it would be prudent to ask how this ongoing litigation affects their business and relationship with the franchisor.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
3
2
10

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

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3

Financial & Fee Risks

Total: 10
5
4
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

4

Legal & Contract Risks

Total: 16
7
4
5

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

5

Territory & Competition Risks

Total: 5
2
0
3

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

6

Regulatory & Compliance Risks

Total: 10
6
1
3

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

7

Franchisor Support Risks

Total: 4
2
2
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

8

Operational Control Risks

Total: 12
4
5
3

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

9

Term & Exit Risks

Total: 18
7
4
7

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

10

Miscellaneous Risks

Total: 2
2
0
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.