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B64/100FDD 2024

HouseMaster — 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
64 / 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
35
Government-backed loans issued
Default rate
23.5%
vs <3% typical · system-wide
5-yr default rate
66.7%
Defaults
4 loans
Loans charged off or defaulted
Total loan volume
$4.9M
Avg loan size
$140K
Participating lenders
14

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
Waived
You give up the right to a jury trial
Non-compete
2 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
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
Texas
State whose law governs disputes — relevant if you're not based there

What drove the 64/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-2.0% YoY) suggests market saturation or franchisee struggles in a mature 242-unit system
  2. 02MINORNo Item 19 (average net income) disclosure prevents ROI validation against $58,825-$92,675 investment and 7.5% initial royalty
  3. 03HIGHActive litigation by franchisor against former franchisees for noncompetition enforcement (2023) indicates potential competitive or operational disputes
  4. 04MINORTiered royalty structure front-loaded at 7.5% on first $125K creates high burden when average revenue is only $146,553, leaving minimal margin for net profit
  5. 05HIGHAffiliate litigation (Window Genie, Molly Maid) within parent company portfolio raises systemic compliance or operational management concerns

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.