FDD Items 3 & 4 · 2026 filing
Border Magic litigation history
What Border Magic disclosed about lawsuits, arbitrations and bankruptcy in the 2026 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 & 4 at a glance
What the filing discloses
- Cases disclosed
- 4
- Item 3, as counted in the filing
- Largest disclosed settlement
- $60K
- As stated in Item 3
- Bankruptcy (Item 4)
- None
- Franchisor, parent, predecessor or officer
- Filing year
- 2026
- Disclosures cover the prior ten years
Extracted from the 2026 Franchise Disclosure Document
Item 3: litigation
4 cases disclosed, all involving affiliate Boulder Designs Franchising LLC or joint filing with Border Magic. Cases include franchisee fraud claim (settled $60K), trade secret violation (settled $20K), breach of contract/non-compete (settled), and injunction/noncompete action (dismissed 2024).
Disclosure signals that moved the score
How this shows up in the verdict
- Multiple litigation cases alleging fraud, deceptive practices, breach of fiduciary duty, and improper royalty retention suggest franchisor credibility issues
- Going concern status indicates financial instability at franchisor level, raising questions about support, marketing, and long-term viability
- Significant settlements ($6,624–$60,000) paid in litigation suggest pattern of disputes over contractual obligations and transparency
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?