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A54/100FDD 2023

Berkshire Hathaway HomeServices — Litigation & Risk

Real Estate · FDD Items 3, 4 & 5

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Moderate — Review

4 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
4
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
54 / 100
FranchiseVerdict composite
Rating
STRONG
STRONG / MODERATE / CAUTION / AVOID

7(a) FOIA data · FY2020–present

SBA Loan Performance

Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.

Total 7(a) loans
12
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
Jury trial waiver
Waived
You give up the right to a jury trial
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
Delaware
State whose law governs disputes — relevant if you're not based there

What drove the 54/100 rating

Risk Score Breakdown

  1. 01MINORFour active putative class action lawsuits challenging core business model (buyer broker compensation practices) create existential regulatory risk
  2. 02MINORNo Item 19 financial disclosure means prospective franchisees cannot verify claimed profitability or validate $45k-$90k investment ROI
  3. 03MINORSlow unit growth (3.0% YoY) with 293 total units suggests mature/declining system; minimal franchisee recruitment confidence
  4. 04MINORUnprotected territory creates direct competition risk from other BHHS franchisees and company-owned offices
  5. 05MINORDeclining royalty floor ($15k minimum) despite low unit growth indicates potential cash flow stress at corporate level

Severity inferred from FDD text — not a regulatory or legal classification

Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.