FDD Items 3 & 4 · 2024 filing

Bombshells Restaurant & Bar litigation history

What Bombshells Restaurant & Bar disclosed about lawsuits, arbitrations and bankruptcy in the 2024 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: 3; Item 3, as counted in the filing

Largest settlement, franchisor's own cases: None stated

Bankruptcy (Item 4): None; Franchisor, parent, predecessor or officer

Filing year: 2024; Disclosures cover the prior ten years

Extracted from the 2024 Franchise Disclosure Document

Item 3: litigation

Three settled matters involving parent RCI Hospitality Holdings, Inc. and CEO Eric Langan: (1) shareholder derivative action settled Oct 2023 for $1.2M in attorneys' fees; (2) securities class action settled Aug 2022 for $2.2M; (3) SEC administrative proceeding settled Sep 2020 for $600K total

Item 3 (litigation) · 3 matters disclosed · 1 pending listed

Litigation cases

Parent, affiliates, master franchisor and subfranchisor

Pending (1)

Stein v. Anakar, et al.
pending
Brought by a third party · RCI Hospitality Holdings, Inc. (our parent) and Eric Langan (our CEO) · filed 2022-01-21 · U.S. District Court for the Southern District of Texas · 4:22-mc-00149
“… No. 4:22-mc-00149 (S.D. Tex.). In October 2023, our parent, RCI Hospitality Holdings, Inc. (“RCI”) and our CEO, Eric Langan, and various other individual defendants, reached a settlement of a shareholder derivative action.”Page 11 of the 2024 FDD, Item 3
Outcome: “agreed to pay $1,200,000 in attorneys’ fees and expenses to plaintiffs’ counsel without admitting liability.”

Concluded (2)

In re RCI Hospitality Holdings, Inc. Securities Litigation
settled
Brought by a third party · RCI Hospitality Holdings, Inc. (our parent) · filed 2020 · U.S. District Court for the Southern District of Texas · 4:19-cv-01841-AHB
“… No. 4:19-cv-01841-AHB (S.D. Tex.). In August 2022, the court approved the settlement of a putative securities class action against our parent, RCI, our CEO, Eric Langan, and various other defendants.”Page 12 of the 2024 FDD, Item 3
Outcome: “the defendants and their insurers agreed to pay $2,200,000 to a settlement class without admitting any liability. In the Matter of RCI Hospitality Holdings, Inc., et al., No. 3-20035 (U.S. Securities and Exchange Commission).”
In the Matter of RCI Hospitality Holdings, Inc., et al.
concluded
Government or regulatory action · RCI Hospitality Holdings, Inc. (our parent) and Eric Langan · filed 2020-09-22 · U.S. Securities and Exchange Commission · 3-20035
“… No. 3-20035 (U.S. Securities and Exchange Commission). On September 22, 2020, our parent, RCI, and our CEO, Eric Langan, settled a civil administrative proceeding with the United States Securities and Exchange Commission (“SEC”) that was formally initiated on the same date.”Page 12 of the 2024 FDD, Item 3

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

Three major litigation settlements totaling $4M+ involving shareholder derivative, securities class action, and SEC penalties suggest governance/compliance failures at corporate level
SEC settlement regarding executive compensation and related party transactions suggests potential misuse of franchisor resources

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?

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