PAUL DAVIS RESTORATION INC FRANCHISE AGREEMENT

Paul Davis Restoration has steadily expanded, growing from 245 locations in 2023 to 266 in 2024—a solid 9% increase—with 26 projected new units signaling continued franchisor commitment. System health shows moderate churn: 6 terminations, 1 non-renewal, and 17 transfers, which isn't alarming for a 266-unit network but warrants checking FDD Item 20 for trends. SBA data is robust with 122 loans averaging $572,541 and a low 4.1% default rate, indicating franchisees secure financing and mostly succeed long-term. The 2025 FDD (Item 7) pegs initial investment at $298,800-$804,900, including a $130,000 franchise fee scaled by territory population (up to 800,000 at $0.26 per capita). Ongoing fees total 4% royalty, 0.8% brand/ad fund (0.75% SMP marketing), plus fixed $1,250/month for software, call center, and support—potentially burdensome for lower performers.

Item 19 shines brightly: average gross revenue hits $6,006,779 across reporting units, though median $3,976,094 reveals a top-heavy distribution where stars drive averages sky-high while half lag below $4M. This bifurcation means aggressive operators in high-demand areas (water/fire/storm restoration for residential/commercial clients) can thrive, especially with insurance ties, but median figures suggest breakeven or modest profits after fees for many. A red flag emerges in litigation: one concluded suit by multiple franchisees against the franchisor in Cook County, IL, over disputes—review Item 3 for details. Overall, the trajectory favors resilient investors eyeing recession-resistant services, but validate local demand and scrutinize outliers before committing.