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B65/100FDD 2024

Real Property Management — 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
65 / 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
98
Government-backed loans issued
Default rate
10.3%
vs <3% typical · system-wide
5-yr default rate
9.1%
Defaults
3 loans
Loans charged off or defaulted
Total loan volume
$26.4M
Avg loan size
$269K
Participating lenders
30

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 65/100 rating

Risk Score Breakdown

  1. 01MEDNo Item 19 financial disclosure (avg revenue/net income not disclosed) prevents ROI validation on $91.7k-$266.2k investment
  2. 02HIGHLitigation involving trademark disputes, tenant habitability claims, and FTC/state regulatory actions against parent company affiliates indicate compliance and operational risk
  3. 03MEDDual royalty structure (7% non-maintenance + 3% maintenance OR minimum fee) creates unclear cost burden without disclosed minimum threshold
  4. 04MINORModest unit growth (8.7% YoY on 423 units = ~37 net adds) suggests market saturation or franchisee performance concerns
  5. 05MEDProperty management business model carries inherent tenant liability exposure, evidenced by disclosed habitability claims against managed properties

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.