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B63/100FDD 2025

EXIT Realty — Litigation & Risk

Real Estate · FDD Items 3, 4 & 5

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Elevated Risk

6 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
6
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
63 / 100
FranchiseVerdict composite
Rating
MODERATE
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
6
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
Total loan volume
$788K
Avg loan size
$131K
Participating lenders
5

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
Non-compete
1 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
No
Franchisor can match any purchase offer when you try to sell
Governing law
New York
State whose law governs disputes — relevant if you're not based there

What drove the 63/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 8.8% YoY (518 units) indicates shrinking franchise system and potential market saturation or franchisee dissatisfaction
  2. 02MEDNo Item 19 financial performance disclosure (Avg Revenue and Net Income not disclosed) prevents validation of actual earning potential and ROI
  3. 03HIGHMultiple active litigations including breach of contract, tortious interference, and commission disputes suggest franchisor-franchisee relationship tensions and possible operational/contractual issues
  4. 04MEDInvolvement in industry-wide antitrust class actions regarding real estate commission practices creates regulatory and reputational risk that could impact franchisee operations and brand value
  5. 05MINORTransaction-based fee model ($50-$400 per side) creates unpredictable revenue stream dependent on agent productivity and market conditions; no baseline guaranteed income
  6. 06MINOR5-year term is relatively short, creating uncertainty in long-term viability and capital recovery timeline for $75K-$216K investment

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.