![Keller Williams logo](https://cdn.brandfetch.io/kw.com/w/128/h/128/fallback/lettermark?c=<img src="https://cdn.brandfetch.io/domain/apple.com?c=1idsvcTjLv919Ax0E2s" alt="Logo by Brandfetch" />){kind=small}
Elevated Risk
29 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
29
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
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
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
Texas
State whose law governs disputes — relevant if you're not based there
What drove the 64/100 rating
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.