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Steri-Clean
How much does Steri-Clean cost?
Initial Investment Range
$85,814 to $262,651
Franchise Fee
$41,000 to $81,000
Steri-Clean is involved in the business of operating specialized businesses that provide remediation services to properties affected by hoarding and/or biohazards as well as providing services including, but not limited to, air quality monitoring, infection control, disinfection, sanitizing, contents restoration and cleaning, precautionary and preventative cleaning for any and all microorganisms; rodent/insect/bird/pest cleanup and deterrent installation; drug, drug lab and drug paraphernalia decontamination; odor removal and tear gas cleanup/removal.
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Steri-Clean April 23, 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.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The franchisor's audited financial statements reveal a significant and worsening stockholder's deficit, reaching ($202,534) in 2024. This means liabilities exceed assets, a strong indicator of financial instability. While the company reported a small net income in 2024, it also made large cash distributions to its owners, further weakening its financial position. This could impact its ability to support you or even remain in business.
Potential Mitigations
- A thorough review of the audited financial statements, including all footnotes and cash flow statements, with your accountant is critical to assess the franchisor's viability.
- Your attorney should discuss the potential implications of the franchisor’s negative net worth on its ability to fulfill its contractual obligations.
- Question the franchisor about their strategy for addressing the stockholder deficit and their policy on owner distributions with guidance from your financial advisor.
High Franchisee Turnover
High Risk
Explanation
The data in Item 20 shows a notable rate of franchisee turnover. Analysis of the data tables for 2022 and 2023 suggests an annual franchisee cessation rate exceeding 10%. In 2024, the franchisor reacquired four franchises from a starting base of 46. This consistent churn could indicate systemic problems, such as issues with profitability, support, or the business model itself, representing a significant risk to your potential success.
Potential Mitigations
- It is essential to contact a significant number of former franchisees listed in Item 20 to understand their reasons for leaving the system.
- Analyzing the turnover data trends over the last three years with your accountant can provide a clearer picture of system stability.
- Discussing the specific reasons for the high number of reacquisitions and cessations with the franchisor is a necessary step, and your attorney can help frame the questions.
Rapid System Growth
Medium Risk
Explanation
The franchise system has more than doubled in size over the last two years, growing from 25 to 55 units. While growth can be positive, such rapid expansion is a concern for a franchisor with a significant stockholder deficit as shown in Item 21. There is a risk that the franchisor's support infrastructure, including training and operational assistance, may not be able to keep pace with this growth, potentially diminishing the quality of support available to you.
Potential Mitigations
- Engaging a business advisor to assess whether the franchisor’s support systems are scalable to match its rapid unit growth would be prudent.
- Speaking with franchisees who joined at different times can provide insight into whether support quality has changed as the system expanded.
- Your accountant should review the franchisor's financials to determine if they are investing sufficiently in support infrastructure to sustain this growth.
New/Unproven Franchise System
Medium Risk
Explanation
While the franchisor's predecessor began in 2014, the current entity exhibits concerning signs of instability. The combination of a significant stockholder deficit, a high rate of franchisee turnover, and a history of franchisee litigation presents a risk profile that is similar to that of a newer, less established system. These factors suggest that despite its years in operation, the system's foundation may not be as stable as its age implies, posing a risk to your investment.
Potential Mitigations
- A deep dive into the franchisor's financial statements with your accountant is necessary to understand the company's financial health.
- Your attorney should help you contact a broad spectrum of current and former franchisees to gauge their satisfaction and profitability.
- Investigate the circumstances of the franchisor's reincorporation from California to Idaho with help from your business advisor.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. The business provides specialized biohazard and hoarding remediation services. This is a needs-based industry rather than one driven by fleeting consumer trends. Therefore, the risk of the business model being a short-lived fad appears to be low.
Potential Mitigations
- To assess long-term viability, you could research the historical and projected demand for specialized cleaning and remediation services with a business advisor.
- Your accountant can help you evaluate the business model’s resilience to economic downturns or shifts in the real estate market.
- Discuss the company's plans for service evolution and adaptation with the franchisor to understand their long-term vision.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD package. Item 2 indicates that the key executives, particularly the founder Cory Chalmers, have extensive and long-term experience in the bio-recovery and remediation industry, dating back to 1995. This substantial industry-specific experience suggests that the management team is not new or unproven in this field.
Potential Mitigations
- It is still wise to verify the management team's reputation by speaking with current and former franchisees about the quality of their leadership and support.
- A business advisor can help you research the professional backgrounds of the key personnel listed in Item 2 for additional context.
- During discovery day, you can directly assess the management team’s expertise and strategic vision for the company.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package. The information in Item 1 and Item 2 suggests the franchisor is founder-owned and operated. There is no disclosure of ownership by a private equity firm or similar investment group, so the specific risks associated with that ownership structure do not appear to be present.
Potential Mitigations
- Your attorney can help you verify the company’s ownership structure through public records to confirm the absence of institutional investors.
- Asking the franchisor directly about their long-term ownership plans can provide insight into potential future sales of the company.
- A business advisor can help you understand the different risks associated with founder-led versus private equity-owned franchise systems.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 of the FDD does not disclose the existence of a parent company. The franchisor, Steri-Clean, Inc., appears to be the primary and controlling entity in the franchise relationship, so the risks associated with an undisclosed or financially weak parent company are not applicable here.
Potential Mitigations
- Your attorney can perform a corporate records search to confirm that Steri-Clean, Inc. is a standalone entity and not a subsidiary of a larger, undisclosed parent.
- It's a good practice to ask the franchisor to confirm in writing that there are no parent companies whose financial condition could affect the franchise.
- Your accountant should still thoroughly review the provided financial statements for any notes related to guarantees or support from other entities.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 discloses a predecessor entity that operated from 2014 until a merger in 2017 created the current franchisor. The disclosure appears straightforward, and the primary risks identified in this analysis, such as financial instability and franchisee turnover, relate to the current entity's recent performance rather than an obscured predecessor history.
Potential Mitigations
- Asking long-tenured franchisees about their experience under the predecessor company can provide historical context and insight.
- Your attorney can review the predecessor disclosures in Items 1, 3, and 4 to ensure they appear complete and compliant with franchise law.
- You could ask the franchisor to explain the reasons for the merger and reincorporation from California to Idaho in 2017.
Pattern of Litigation
High Risk
Explanation
Item 3 reveals a concerning pattern of disputes with former franchisees. There is a pending arbitration initiated by a franchisee alleging breach of contract. Additionally, the franchisor recently paid $50,000 to settle a lawsuit brought by another former franchisee that included claims of fraud and unfair trade practices. This history of significant legal conflict, particularly franchisee-initiated lawsuits, indicates a potential for systemic issues in the franchise relationship and a litigious environment.
Potential Mitigations
- A detailed review of the allegations and outcomes of all cases in Item 3 with your franchise attorney is crucial.
- You should attempt to contact the former franchisees involved in these lawsuits to understand their perspective, with guidance from your attorney.
- Treat this pattern of litigation as a significant red flag and discuss the potential risks to your own investment with your attorney and business advisor.
Disclosure & Representation Risks
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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Financial & Fee Risks
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
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Legal & Contract Risks
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.
Territory & Competition Risks
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.
Regulatory & Compliance Risks
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.
Franchisor Support Risks
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.
Operational Control Risks
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.
Term & Exit Risks
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.
Miscellaneous Risks
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.
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