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D75/100FDD 2025

Watters International Realty — Litigation & Risk

Real Estate · FDD Items 3, 4 & 5

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Moderate — Review

5 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
5
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
75 / 100
FranchiseVerdict composite
Rating
CAUTION
STRONG / MODERATE / CAUTION / AVOID

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 75/100 rating

Risk Score Breakdown

  1. 01MINORPending breach of contract and non-compete lawsuit by franchisor suggests systemic operational/relationship issues
  2. 02HIGHMultiple litigation exposures including fraud allegations in real estate transactions and anti-trust settlement indicate governance and compliance concerns
  3. 03MINOROnly 10 units with unknown growth trajectory suggests stagnant or declining system; no Item 19 financial performance disclosure prevents ROI validation
  4. 04MEDWide investment range ($49,350–$200,750) without disclosed average revenue/net income creates opacity around actual profitability and payback period
  5. 05MEDNo protected territory combined with 6–10% royalty fee on undisclosed revenues increases competitive risk and cash flow unpredictability
  6. 06HIGHGoing concern flag indicates franchisor financial instability, raising questions about support, training, and system viability

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.