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B66/100FDD 2025

Motto Mortgage — 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
66 / 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
3
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$1.6M
Avg loan size
$526K
Participating lenders
3

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
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
Colorado
State whose law governs disputes — relevant if you're not based there

What drove the 66/100 rating

Risk Score Breakdown

  1. 01MEDUnit count declined 25% YoY (171 units), indicating systemic franchisee struggles or exits
  2. 02MINORFour active lawsuits in 2024 including royalty collection defaults, suggesting franchisee cash flow problems and franchisor-franchisee conflict
  3. 03MEDNo financial disclosure (Item 19): average revenue and net income undisclosed, preventing ROI validation
  4. 04MINORUnprotected territory creates direct competition risk and revenue cannibalization within system
  5. 05MINORHigh per-transaction royalty (25 BPs) plus $2,500 monthly floor creates fixed cost burden regardless of production
  6. 06MINORMortgage industry volatility and rising rate environment (2023-2024) likely driving unit attrition
  7. 07MINORFranchise fee ($35,000) relatively low, but combined with royalty structure suggests weak unit economics

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.