Coldwell Banker: Litigation & Risk
Real Estate · FDD Items 3, 4 & 5
Elevated Risk
7 cases disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 7
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 56 / 100
- FranchiseVerdict composite · higher is better
- Rating
- B
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 78
- Government-backed loans issued
- Charge-off rate
- 16.3%
- vs 16% franchise average
- 5-yr charge-off rate
- 0.0%
- Defaults
- 8 loans
- Loans charged off or defaulted
- Total loan volume
- $34.9M
- Avg loan size
- $448K
- Participating lenders
- 32
FDD Items 5, 6 & 17: What You Give Up
Contract Risk Indicators
- Mandatory arbitration
- Not required
- You retain the right to sue in court
- Jury trial waiver
- Not waived
- 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
- NJ
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Multiple pending and resolved matters including: trademark/breach suit vs former franchisee (won); TCPA class action settled $200K; antitrust commission suits (Moehrl/Burnett settled $83.5M); Nosalek MLS antitrust; Batton buyer-side antitrust/Tuccori opt-in settlement $9.6M; Chinitz TCPA Anywhere Advisors (preliminary settlement); Homie antitrust (dismissed); merger-related stockholder suits (mostly resolved).
What drove the 56/100 verdict
Risk Score Breakdown
- 01MINORDeclining unit count (-0.9% YoY) suggests market saturation or franchisee dissatisfaction in a mature 1,900-unit system
- 02MEDNo average revenue or net income disclosure (missing Item 19) prevents assessment of actual franchisee profitability and ROI
- 03HIGHMultiple active litigation categories including antitrust commission structure claims and TCPA class actions indicate systemic operational/legal risks
- 04MINORUnprotected territory creates direct competition risk between franchisees and potential margin compression
- 05MEDHigh investment ceiling ($521,775) combined with undisclosed returns creates asymmetric risk/reward profile
- 06MINORDeclining royalty structure incentivizes growth but may signal prior franchisee profitability concerns at standard 5.5% rate
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.