Sotheby’s International Realty
Formerly known as Realty Affiliates
Bottom line
- Total investment $47K – $519K including a $25K franchise fee, 6.0% ongoing royalty.
- No Item 19 financial performance data disclosed — the franchisor chose not to publish revenue figures.
- Rated CAUTION with a risk score of 71/100. SBA loan default rate of 0.0% across 4 loans (below the industry average).
- 11 litigation matters disclosed in Item 3 — higher than typical. Review the summary for patterns (franchisor-initiated vs. franchisee-initiated).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Sotheby’s International Realty unit return on the cash you put in?
Unlevered ROIC · per unit
35%
In Yale's "attractive" band (30–60%)
Overview
About
Sotheby's International Realty franchisees operate high-end residential real estate brokerage offices under the luxury Sotheby's brand, generating revenue primarily through real estate transaction commissions. Daily activities include recruiting and managing agents, marketing luxury properties, client relationship management, and local market operations while paying the franchisor 6% of gross revenue and maintaining brand standards. The franchise model relies on the Sotheby's prestige to attract high-net-worth sellers and justify premium commission splits in competitive luxury markets.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
This franchisor did not disclose financial performance representations in Item 19, or our extractor could not parse them.
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 5 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
A stagnating luxury real estate franchise system facing multiple antitrust challenges to its commission model, with opaque financials, no territorial protection, and escalating litigation that threatens franchisee viability and franchisor stability.
Score breakdown · what drove the 71 / 100 rating
- 01MINORDeclining unit count (0.9% YoY growth indicates stagnation/contraction in mature system)
- 02MEDMultiple active class-action antitrust lawsuits regarding commission structures—core business model under legal challenge
- 03MINORNo Item 19 financial disclosure—cannot validate claimed average revenue or profitability claims
- 04MINORWide fee range ($47K-$519K) suggests highly variable territory quality with no protected territory guarantees
- 05HIGHOngoing litigation regarding franchise non-renewal (Brazen case) signals franchisor-franchisee disputes over renewal rights
- 06MINORTCPA class action and shareholder disclosure lawsuits indicate broader governance and transparency concerns post-Compass acquisition
- 07MED6% royalty on undisclosed revenue base makes ROI assessment impossible; combined with no protected territory, creates margin compression risk
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
88 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Sotheby’s International Realty · FDD (2026) PDF