1 document warning1 thing to verifyFranchisor financials: moderate concern

Rainbow Restoration — full diligence report

The average Rainbow Restoration unit reports $89k/mo in revenue.

Opening one costs $185k–$352k.

DisclosedItem 19 · 284 units reporting · Item 7 · 328 open units

Both figures are the franchisor’s own, straight out of the disclosure document. What is masked below is the rest of the analysis — and the capital check that follows measures your cash against that opening range.

13 sections · 104 cited figures · 12 operational tripwires · 14 diligence questions

Everything below is in the report. Every figure is cited to an FDD Item and page, and labelled with where the number came from. The labels are free. The numbers are what you are buying.

Franchise Edge automates franchise diligence. We read the franchisor’s own Franchise Disclosure Document — the filing a franchisor is legally required to hand you at least 14 days before you sign anything or pay anything — and run the work that takes a buyer weeks by hand: every disclosed cost, the unit economics behind the headline, the full fee stack, and what happened to the units that opened before you.

Your analysis is ready. The framework is below — every section, every cited figure, every question, exactly as it appears in the report.

New to FDDs? Here is what is in one

An FDD runs to 23 numbered Items and a few hundred pages. Four of them do most of the work in this report:

Item 7— what it costs to open, low to high. That is the range above, and it is the franchisor’s own estimate.
Item 19 — what units actually earn. A franchisor is not required to publish one at all; when it is missing, or when it reports profit where you expected revenue, that is itself a finding.
Item 20 — openings, closures, transfers and terminations, year by year. This is where churn shows up, and where a growth story either holds or does not.
Item 6 — the ongoing fees. Royalty and ad fund get quoted on a discovery call; the rest of the list usually does not.

Every figure in the report is cited to its Item and page, so you can check any of it against the document yourself.

Questions before you buy? jason@foundersplinko.com — a person, not a ticket queue.

Disclosedstated in this FDDDerivedour calculation from disclosed figuresBenchmarkour industry range, because the FDD does not disclose itInferredAI classification

Capital available

Drag to enter the capital you have available.

Against the total investment the franchisor discloses in Item 7. What it means for your loan, your coverage ratio and your payback is locked.

What it costs to open

11 locked

Item 7, as the franchisor states it. 11 line items.

Initial Franchise FeeDisclosedItem 7, pp. 31–35Locked

VehicleDisclosedItem 7, pp. 31–35Locked

Equipment, Supplies & InventoryDisclosedItem 7, pp. 31–35Locked

Advertising & Promotional / Local Marketing SpendingDisclosedItem 7, pp. 31–35Locked

Training (All Phases), Travel, Lodging & FoodDisclosedItem 7, pp. 31–35Locked

Deposits, Permits & LicensesDisclosedItem 7, pp. 31–35Locked

Professional FeesDisclosedItem 7, pp. 31–35Locked

Recruiting and OnboardingDisclosedItem 7, pp. 31–35Locked

Lead Safe Equipment, Supplies and CertificationDisclosedItem 7, pp. 31–35Locked

Additional Funds – 6–9 Months Working CapitalDisclosedItem 7, pp. 31–35Locked

Total investmentDisclosedItem 7, pp. 31–35Locked

Buyer-fit underwriting

5 locked

What the deal asks of you, against what you told us you have.

Capital gapDerivedLocked

Loan neededDerivedLocked

Net worth requirementDisclosedItem 5Locked

Liquid capital requirementDisclosedItem 5Locked

Margin after fees, rent and debtDerivedLocked

The cash ladder — Network Average

13 locked

13 rungs, monthly, from disclosed revenue down to what the operator actually keeps. Every rung is labelled with where its number came from.

1. Gross revenueDisclosedLocked

2. − Franchise feesDisclosedLocked

3. − Fixed monthly feesDisclosedLocked

4. − Rent & occupancyDisclosedLocked

5. = Margin after fees & rentDerivedLocked

Not profit. Cost of goods, labor and operating costs have not been subtracted yet.

6. − Cost of goodsBenchmarkLocked

7. − LaborBenchmarkLocked

8. − Other operating costsBenchmarkLocked

9. = Operating EBITDABenchmarkLocked

Before debt service, owner compensation, depreciation and taxes.

10. − Debt serviceDerivedLocked

11. = Cash after debt, before owner drawBenchmarkLocked

The operator has not been paid out of this yet.

12. Debt-service coverage ratioBenchmarkLocked

Lenders typically want 1.25 or better: $1.25 of operating profit for every $1.00 of loan payment.

13. Years to recover the build-outBenchmarkLocked

Recovery of the build-out only. It does not include the operator's own time.

How you pay for it

9 locked

The loan this unit would need, and whether the unit can carry it.

Loan amountDerivedLocked

RateBenchmarkLocked

TermBenchmarkLocked

Monthly paymentDerivedLocked

Cash you put inDerivedLocked

Cash after debtDerivedLocked

Return on your cashDerivedLocked

Debt-service coverage ratioDerivedLocked

What this unit could supportDerivedLocked

Ongoing fees and hidden costs

19 locked

19 separate charges in the agreement. Most buyers find four.

RoyaltyDisclosedItem 6Locked

Brand fundDisclosedItem 6Locked

Local advertisingDisclosedItem 6Locked

Business Management Software Monthly FeeDisclosedItem 6Locked

Xactware Software Monthly FeeDisclosedItem 6Locked

Technology Package Monthly FeeDisclosedItem 6Locked

BackOffice HelpDesk Fee (required first 12 months)DisclosedItem 6Locked

Minimum Local Marketing Spending (post-startup)DisclosedItem 6Locked

Initial Marketing Spend Requirement – Year 1DisclosedItem 6Locked

Initial Marketing Spend Requirement – Year 2DisclosedItem 6Locked

Call Center Fee (mandatory third-party)DisclosedItem 6Locked

IICRC Certification Exam FeesDisclosedItem 6Locked

QuickBooks Online Monthly Fee (via ZorWare)DisclosedItem 6Locked

Key Accounts / Management FeeDisclosedItem 6Locked

Transfer FeeDisclosedItem 6Locked

Renewal FeeDisclosedItem 6Locked

Optional Air Duct Cleaning Equipment & TrainingDisclosedItem 6Locked

Paradox ATS (Optional Job Applicant Tracking)DisclosedItem 6Locked

iPad per Technician/VehicleDisclosedItem 6Locked

What units actually make

2 locked

The franchisor's own numbers, and how wide the spread really is.

Network averageDisclosedItem 19, pp. 79–82Locked

Units reportedDisclosedItem 19, pp. 79–82Locked

What we found in the document

0 locked

23 Items located and parsed. Every figure above cites one of them.

Item 1Item 2Item 3Item 4Item 5Item 6Item 7Item 8Item 9Item 10Item 11Item 12Item 13Item 14Item 15Item 16Item 17Item 18Item 19Item 20Item 21Item 22Item 23

Before you commit

1 locked

1 things this document cannot settle, and how to settle them.

Operational tripwires

Locked finding

Franchisor financial condition

8 locked

8 findings from the audited statements.

1 medium

Locked finding

Operational tripwires

12 locked

12 clauses that change what you signed up for. 2 are rated high.

2 high9 medium1 low

Locked finding

System scale and turnover

5 locked

Item 20, year-end.

Total unitsDisclosedItem 20, pp. 83–89Locked

OpenedDisclosedItem 20, pp. 83–89Locked

ClosedDisclosedItem 20, pp. 83–89Locked

Changed handsDisclosedItem 20, pp. 83–89Locked

Owner turnoverDerivedLocked

330 outlets is this record's reconstruction of the starting count, worked back from the year-end total and the year's openings and closures rather than read from Item 20 Table 1. Every rate below is a share of that starting count, not of today's. Check the reconstruction against Table 1 in your own copy.

Leaving — renewal, exit and transfer

Not yet read for this brand

Item 17 — how long you are in, what ends the agreement, what it takes to sell the business, and what you are still bound by after you leave.

How long you are inHow it endsHow you sell itWhat happens after

Who to call, and what to ask

13 locked

14 questions, grouped for operators running a unit today, operators who left last year, placing whoever answers the phone.

What do you actually run for cost of goods, as a percent of sales?

Locked finding

Who runs it

6 locked

6 executives, with tenure and prior operating history.

Chief Executive OfficerPresidentVice President of OperationsSVP, Corporate ControllerSecretary / EVP General CounselChief Development Officer, Neighborly

Locked finding

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