Keller Williams: Litigation & Risk
Real Estate · FDD Items 3, 4 & 5
Elevated Risk
29 cases disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 29
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 74 / 100
- FranchiseVerdict composite · higher is better
- Rating
- A
- 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
- 12
- Government-backed loans issued
- Charge-off rate
- 0.0%
- vs 16% franchise average
- 5-yr charge-off rate
- N/A
- Defaults
- 0 loans
- Loans charged off or defaulted
- Total loan volume
- $5.8M
- Avg loan size
- $485K
- Participating lenders
- 11
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
- 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
- TX
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Multiple pending antitrust class actions (Moehrl/Sitzer/buyer-side) related to MLS buyer broker commission conspiracies; several TCPA class actions; individual business disputes (Davis, Basinski, Morris, Fetick, Coffey, Montalbano); global $70M settlement of Moehrl/Sitzer/Umpa cases achieved in 2024; several concluded cases settled including $40M TCPA class settlement (DeShay)
What drove the 74/100 verdict
Risk Score Breakdown
- 01MEDMultiple active class action antitrust lawsuits (Moehrl, Sitzer) alleging commission inflation conspiracy create existential legal and reputational risk to the franchise system
- 02HIGHSystem declining 0.5% YoY with 773 units suggests erosion of franchisee confidence and potential accelerating departures if litigation outcomes are unfavorable
- 03MEDNo disclosed average revenue or net income (missing Item 19 equivalent) prevents validation of the $182k–$335k investment ROI and profitability claims
- 04MED6% royalty on Gross Commission Income is high relative to industry peers and creates ongoing cash drain even during market downturns or individual underperformance
- 05MINORUnprotected territory enables franchisor to recruit competing franchisees in same market, undercutting individual franchisee profitability and customer acquisition
- 06HIGHGoing Concern = False status indicates franchisor financial instability or auditor concerns about long-term viability, threatening support infrastructure and system cohesion
- 07HIGH5-year term with no renewal guarantees combined with litigation risk creates uncertainty in franchisee's ability to recoup initial 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.