FDD Items 3 & 4 · 2025 filing
American Family Care litigation history
What American Family Care disclosed about lawsuits, arbitrations and bankruptcy in the 2025 Franchise Disclosure Document. Item 3 lists the material legal actions a franchisor must report; Item 4 covers bankruptcy. This is the franchisor's own disclosure, not a court record, and not legal advice.
Items 3 (litigation) & 4 (bankruptcy) at a glance
What the filing discloses
- Cases disclosed
- 4
- Item 3, as counted in the filing
- Largest settlement, franchisor's own cases
- $6.5M
- As stated in Item 3
- Bankruptcy (Item 4)
- None
- Franchisor, parent, predecessor or officer
- Filing year
- 2025
- Disclosures cover the prior ten years
Extracted from the 2025 Franchise Disclosure Document
Item 3: litigation
1 pending action (franchisor v. former franchisee for non-compete enforcement, currently stayed due to bankruptcy filing); 3 prior actions settled including False Claims Act qui tam ($1.41M total settlement), master development agreement dispute ($1M), and master development agreement fraud claim ($6.5M)
Item 3 (litigation) · 4 matters disclosed · 1 pending listed
Litigation cases
The franchisor
Pending (1)
AFC Franchising, LLC v Trovato Medical Group, Inc. and Parmjit M. Singh, MD
pendingBrought against a franchisee · filed 2023-04-21 · Circuit Court of Jefferson County, Alabama; removed to US District Court for the Northern District of Alabama · CV-2023-901311 (removed: 2:23-cv-684)
“… Circuit Court of Jefferson County, Alabama, Case No. CV-2023-901311, filed April 21, 2023 now moved to US District Court for the Northern District of Alabama (Case No. 2:23-cv-684). We filed this complaint against our former franchisee, Trovato Medical Group, Inc.”Page 14 of the 2025 FDD, Item 3
Concluded (3)
Lavender Health Care, LLC vs. AFC Franchising, LLC
settledBrought by a franchisee · filed 2022-01-14 · Circuit Court of Shelby County, Alabama (originally Circuit Court of Manatee County, Florida) · CV-2019-900415.00-LMA
“… Circuit Court of Shelby County, Alabama, Case No. CV-2019-900415.00-LMA, filed January 14, 2022. The plaintiff filed its original complaint in the Circuit Court of Manatee County, Florida on February 6, 2019, with regard to Richard Kimsey’s master developer agreement with Doctors Express Franchising, LLC which was later assigned to us”Page 15 of the 2025 FDD, Item 3
Outcome: “This case was settled by the parties on May 30, 2024 and we paid the plaintiff $1,000,000.”
Danilo Purugganan v AFC Franchising, LLC
settledBrought against a franchisee · filed 2020-03-06 · Circuit Court of Shelby County, Alabama; removed to US District Court for the Northern District of Alabama; related action in US District Court for the District of Connecticut · CV-2020-900226 (removed: 2:20-cv-456; related: 3:20-cv-360-KAD)
“… Circuit Court of Shelby County, Alabama, Case No. CV-2020-900226, filed March 6, 2020. We initiated this case to seek declaratory judgment to enforce the forum selection and limited exclusivity clauses in the master developer agreement between Danilo Purugganan (“Purugganan”) and Doctors Express Franchising, LLC, which was later assigned to us.”Page 15 of the 2025 FDD, Item 3
Outcome: “This case was settled by the parties on September 18, 2024 and we paid Purugganan $6,500,000.”
United States of America ex rel., Anita C. Salters, Plaintiffs vs. American Family Care, Inc., Defendant
settledGovernment or regulatory action · filed 2010-10-20 · United States District Court, Northern District of Alabama, Northeastern Division · 5:10-CV-2843-IPJ
“… United States District Court, Northern District of Alabama, Northeastern Division, Civil Action No. 5:10-CV-2843-IPJ. On October 20, 2010, Relator Anita C. Salters filed a qui tam action against AFCLLC (then known as American Family Care, Inc.”Page 14 of the 2025 FDD, Item 3
Outcome: “The defendant vigorously defended the allegations under the False Claims Act. In July 2017, the parties entered into a settlement agreement under which, without admitting any wrongdoing, the defendant paid $210,000 in exchange for the plaintiff releasing all claims against the defendant and its affiliates and dismissing the complaint. The complaint was dismissed in July 2017.” (page 15)
Item 3 lists the litigation the franchisor must disclose; a matter against a parent, an affiliate or a named officer is not a matter against the franchisor, and pending claims are allegations, not findings.
Disclosure signals that moved the score
How this shows up in the verdict
- Active litigation on franchise termination and contract breach (Boni-Graceful, Trovato) suggests franchisor enforcement issues or franchisee performance disputes
- Prior False Claims Act settlement (Salters) indicates potential billing/compliance issues in healthcare vertical—critical regulatory risk
- Exclusivity dispute history (Purugganan) and master developer termination (Lavender) suggest franchisor-franchisee alignment issues and territorial conflicts
The verdict grade is FranchiseVerdict's editorial assessment across SBA loan performance, unit growth, revenue and disclosure signals. It is not investment advice.
Before you weigh a lawsuit
How to read Item 3
A franchisor must disclose pending actions and any material civil action involving the franchise relationship, plus convictions or civil judgments for fraud, unfair or deceptive practices, or franchise-law violations, going back ten years. A case the franchisor brought against a franchisee counts too. Item 3 does not include every dispute: settled claims below the materiality line and matters resolved in private arbitration can be absent.
Questions worth asking current and former franchisees, using the contact list in Item 20:
- Were you, or anyone you know in the system, party to a dispute with the franchisor?
- Was it resolved by settlement, arbitration or a court, and on what terms?
- Has the number of disputes gone up or down since you signed?