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D70/100FDD 2025

Realty Executives — Litigation & Risk

Real Estate · FDD Items 3, 4 & 5

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Elevated Risk

9 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
9
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
70 / 100
FranchiseVerdict composite
Rating
CAUTION
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
5
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
$893K
Avg loan size
$179K
Participating lenders
4

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

What drove the 70/100 rating

Risk Score Breakdown

  1. 01MEDUnit decline of 10.1% YoY indicates system contraction and potential franchisee dissatisfaction
  2. 02HIGHMultiple active litigations including class-action antitrust suit suggests serious franchisor-franchisee relationship problems and potential systemic issues
  3. 03MINORNo Item 19 (average revenue/income disclosure) prevents validation of earnings claims and ROI viability
  4. 04MINORFlat-fee model ($350/salesperson) creates misalignment: franchisor profit independent of franchisee success
  5. 05MINORHigh investment ceiling ($430,500) with declining unit count signals poor market conditions and increased franchisee financial risk
  6. 06HIGHLitigation involving non-compete/non-solicitation enforcement suggests franchisor aggressively pursues legal action against franchisees
  7. 07HIGHGoing Concern status listed as 'False' — unclear if this means auditor concerns about franchisor viability exist

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.