The Grout Medic
Initial Investment Range
$122,000 to $175,000
Franchise Fee
$70,000
The franchise offered is for the establishment and operation of a home-based, mobile business that offers a wide variety of interior grout and tiling cleaning, restoration, recaulking, and protection services in both residential and commercial markets.
Enjoy our complimentary free risk analysis below
Unlock the full risk analysis to access 9 more categories covering 100+ risks.
The Grout Medic April 28, 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, The Grout Medic, LLC (TGM), does not provide its own financial statements. Instead, its parent, Premium Service Brands, LLC (PSB), provides a guarantee and its consolidated financials. These financials show PSB has a significant and worsening members' deficit (negative net worth) of over $5.8 million and has operated at a net loss for the last two years. State regulators in Maryland and Illinois have noted this financial condition as a risk, requiring deferred fee payments.
Potential Mitigations
- An experienced franchise accountant must review the parent company's audited financial statements, including all footnotes, to assess its ability to support the system.
- Discuss the implications of the parent's negative net worth and operating losses with your financial advisor to understand the risk to your investment.
- Your attorney should explain the practical protections, if any, offered by the parent company's guarantee of performance.
High Franchisee Turnover
High Risk
Explanation
Item 20 data reveals a very high franchisee turnover rate. In 2024, 14 outlets ceased operations, were terminated, or did not renew, out of a base of 61 units at the start of the year. This represents an approximate annual turnover rate of 23%, which may be a significant indicator of potential issues within the system, such as franchisee unprofitability, dissatisfaction, or other systemic problems. This level of churn suggests a substantial risk to prospective franchisees.
Potential Mitigations
- It is critical to contact a significant number of former franchisees listed in Exhibit F to understand their reasons for leaving the system.
- Your accountant should analyze the turnover data across all three years provided in Item 20 to identify any persistent negative trends.
- Discuss the high turnover rate directly with the franchisor and evaluate the credibility of their explanation with your business advisor.
Rapid System Growth
Medium Risk
Explanation
The system is growing, with 22 new outlets opened in the most recent fiscal year. This growth, when viewed alongside the parent company's financial condition (which includes a net loss and negative net worth), could suggest that the franchisor may be expanding faster than its support infrastructure can sustain. Rapid growth without sufficient financial backing can potentially strain resources for training, field support, and technology, affecting both new and existing franchisees.
Potential Mitigations
- Inquire with a broad range of existing franchisees about the current quality and responsiveness of the franchisor's support systems.
- A thorough review of the parent's financial statements with your accountant is necessary to assess if they have the capital to support this growth.
- Question the franchisor on their specific plans to scale support staff and infrastructure to match the rate of new unit openings.
New/Unproven Franchise System
Medium Risk
Explanation
While the parent company, Premium Service Brands, has been franchising since 2015, The Grout Medic, LLC itself was formed in September 2021 after acquiring the assets of a predecessor. This makes the direct franchisor a relatively new entity. As a newer system under this specific ownership, it may still be refining its operational processes, support structures, and brand strategy, which can present a higher level of risk compared to a more mature and established franchise system.
Potential Mitigations
- Conduct extensive due diligence on the performance of the system since the 2021 acquisition by speaking with franchisees who have operated under both the old and new ownership.
- Your business advisor should help you assess whether the parent's broader franchising experience appears to be effectively applied to this specific brand.
- Your attorney can help you seek stronger contractual protections to compensate for the risks associated with a newer franchise entity.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. The business model, focusing on grout and tile restoration, serves a persistent need in home maintenance rather than being tied to a fleeting trend. However, you should still consider the long-term market dynamics. A business tied to a fad can see demand evaporate, leaving you with long-term contractual obligations and a worthless investment.
Potential Mitigations
- Investigate the long-term stability and demand for grout and tile services in your local market with the help of a business advisor.
- During your due diligence, ask current franchisees about the sustainability of customer demand and the impact of economic cycles on their business.
- Review the franchisor's plans for service innovation and adaptation with your business advisor to gauge their long-term focus.
Inexperienced Management
Low Risk
Explanation
This risk appears low. The management team disclosed in Item 2, including CEO Paul Flick, has extensive experience managing the parent company, Premium Service Brands, and its large portfolio of affiliated home service franchises. This experience in franchising is a positive factor. However, the numerous regulatory actions disclosed in Item 3 against these same leaders could call into question the quality and nature of that experience.
Potential Mitigations
- While management appears experienced, discuss the numerous regulatory actions disclosed in Item 3 with your attorney to form a complete picture of their track record.
- Question the franchisor about the specific experience of the brand-level managers for The Grout Medic.
- Speak with current franchisees about their direct experiences with the management team's competence and support.
Private Equity Ownership
High Risk
Explanation
The Grout Medic, LLC is part of the Premium Service Brands portfolio, which is owned by the private equity firm AE Capital. PE ownership can introduce risks, as their typical goal is to grow and sell the company within a set timeframe. This can lead to decisions that prioritize short-term profit, like cutting support costs or aggressive fee increases, over the long-term health of franchisees. The parent company's current financial losses and negative net worth amplify this risk.
Potential Mitigations
- Research the track record of AE Capital and Premium Service Brands with their other franchise systems with your business advisor.
- Ask your attorney to scrutinize the franchisor's rights to sell or assign the franchise agreement, which are typically very broad.
- Discuss with current franchisees whether they have experienced negative changes in support, fees, or culture since the PE involvement began.
Non-Disclosure of Parent Company
Low Risk
Explanation
The FDD discloses the parent company structure and includes the consolidated financial statements for the parent/guarantor, Premium Service Brands, LLC. Therefore, the risk of non-disclosure is not present. However, the content of those financial statements, which show net losses and a significant members' deficit (negative net worth), presents a separate and significant financial stability risk.
Potential Mitigations
- It is essential for your accountant to thoroughly review the provided parent company financial statements and the accompanying guarantee.
- Your attorney should analyze the terms of the Guarantee of Performance to determine the extent and enforceability of the parent's backing.
- Discuss the practical implications of a financially weak guarantor with your business advisor.
Predecessor History Issues
Medium Risk
Explanation
The FDD discloses that the current franchisor acquired the assets of a predecessor, TGM TEX, in 2021. While no specific negative history about the predecessor is detailed, the extensive litigation and regulatory action history of the *current* parent company and its affiliates, as disclosed in Item 3, presents a significant concern regarding the operational and ethical history of the management team that now controls The Grout Medic system.
Potential Mitigations
- Ask your attorney to carefully review the disclosures in Item 1 and Item 3 regarding both the predecessor and the current parent company's history.
- If possible, seek out and speak with franchisees who operated under the predecessor to understand the system's historical challenges.
- Focus your due diligence on the track record of the current management team, Premium Service Brands, as their history is extensively documented in Item 3.
Pattern of Litigation
High Risk
Explanation
TGM itself has no disclosed litigation. However, its parent (Premium Service Brands) and affiliates (notably 360 Painting and Rooterman) have a significant history of litigation and government enforcement actions. These include numerous lawsuits with franchisees alleging fraud and misrepresentation, and multiple regulatory actions from states like California, Maryland, and Illinois for disclosure violations. The CEO was personally barred from selling franchises in California for 36 months, which is a major red flag.
Potential Mitigations
- Your franchise attorney must conduct a detailed review of all litigation and governmental actions disclosed in Item 3.
- A pattern of regulatory actions and franchisee lawsuits alleging fraud against affiliated brands suggests a potential for systemic issues; this should be treated as a serious risk.
- Discuss the implications of the CEO's California bar order with your attorney.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Purchase the complete risk review to see all 102 risks across all 10 categories.
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.
Related Services Franchises
1-800-Services
$153,580 to $327,040
Ace Handyman Services
$96,997 to $223,797
Best Choice Roofing
$117,410 to $496,910
CORE Group Restoration
$82,250 to $378,750
Corporate Cleaning Group
$94,240 to $141,700
Lawn Pride
$55,000 to $130,000
Outdoor Lighting Perspectives
$179,000 to $222,200
Pet Butler
$94,881 to $117,901
Richard’s Painting
$60,150 to $144,550
Sir Grout
$127,375 to $197,720
Two Maids
$83,440 to $149,890
Zips Cleaners
$205,250 to $1,198,000