FDD Items 3 & 4 · 2025 filing

Carstar litigation history

What Carstar 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: 11; Item 3, as counted in the filing

Largest settlement, franchisor's own cases: $10K; 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

3 CARSTAR-initiated breach/noncompete actions; 3 pending parent (Driven Brands Holdings) securities and derivative actions; 2 concluded actions (Gabbay settlement $10K paid; Canada affiliate CAN$438K settlement). Affiliate actions for Arby's and Dunkin' no-poaching settlements also disclosed.

Item 3 (litigation) · 11 matters disclosed · 3 pending listed

Litigation cases

The franchisor

Concluded (2)

CARSTAR Franchisor SPV LLC, successor-in-interest to CARSTAR Franchise Systems, Inc. v. Raffiani & Han Enterprises Inc., d/b/a Charlie's Auto Body, and Pauline F. Waldron
concluded
Brought against a franchisee · filed 2024-08-20 · United States District Court for the Northern District of New York · 1:24-cv-01027
“Case No. 1:24-cv-01027, in the United States District Court for the Northern District of New York. On August 20, 2024, CARSTAR filed this action against a former franchisee and its guarantor for violating the post-term noncompetition obligations under the franchise agreement and the Lanham Act.”Page 25 of the 2025 FDD, Item 3
Outcome: “The parties have reached a resolution, and the matter has been closed.”
Simple Yes Corp dba Carstar Guardian Auto Body v. CARSTAR Franchisor SPV LLC (Case No. JS21-00225N) and CARSTAR Franchisor SPV LLC v. Simple Yes Corp dba Carstar Guardian Auto Body and Oded Gabbay (Case No. 3:21-cv-01723-M)
settled
Brought by a franchisee · filed 2021 · Justice Court of Dallas County, Texas, Precinct 3, Place 2, and the United States District Court for the Northern District of Texas · JS21-00225N; 3:21-cv-01723-M
“On June 14, 2021, a former franchisee filed the small claims action above against us, alleging wrongful termination of its franchise agreement and seeking damages.”Page 27 of the 2025 FDD, Item 3
Outcome: “the Gabbay Parties and CARSTAR, without admitting any wrongdoing, entered into a settlement and release agreement, under the terms of which: (a) we agreed to (1) pay the Gabbay Parties $10,000 to de-identify the applicable CARSTAR Facility”

Status not stated in the filing (2)

CARSTAR Franchisor SPV LLC v. West Coast Collision and Mark J. Shackleford
Brought against a franchisee · filed 2024-10-16 · United States District Court for the Central District of California · 5:24-cv-02198-DDP-SP
“… Case No. 5:24-cv-02198-DDP-SP, in the United States District Court for the Central District of California. On October 16, 2024, CARSTAR filed this breach of contract action against a former franchisee and its guarantor for amounts owed under the franchise agreement”Page 25 of the 2025 FDD, Item 3
CARSTAR Franchisor SPV LLC, successor-in-interest to CARSTAR Franchise Systems, Inc. v. Wilson Auto Collision, Inc., d/b/a Wilson CARSTAR Niagara, GBWAC LLC, d/b/a Wilson CARSTAR Green Bay West, and Kevin John Wilson
Brought against a franchisee · filed 2024-03-28 · United States District Court for the Western District of North Carolina · 3:24-cv-00354
“Case No. 3:24-cv-00354, in the United States District Court for the Western District of North Carolina. On March 28, 2024, CARSTAR filed this action against former franchisees and their guarantor for violating the post-term noncompetition obligations under their franchise agreements and the Lanham Act.”Page 25 of the 2025 FDD, Item 3

Parent, affiliates, master franchisor and subfranchisor

Pending (3)

Gaiman v. Fitzpatrick, et al.
pending
Driven Brands Holdings Inc. (derivative action against its current and former executive officers and board members) · filed 2025-04-30 · United States District Court for the Western District of North Carolina (Charlotte Division) · 3:25-cv-00288
“… Case No. 3:25-cv-00288, in the United States District Court for the Western District of North Carolina (Charlotte Division). On April 30, 2025, Jonathan Gaiman filed a purported derivative complaint in the United States District Court for the”Page 26 of the 2025 FDD, Item 3
Terwilliger v. Fitzpatrick, et al.
pending
Driven Brands Holdings Inc. (derivative action against its current and former executive officers and board members) · filed 2025-01-10 · United States District Court for the Western District of North Carolina (Charlotte Division) · 3:25-cv-00019
“… Case No. 3:25-cv-00019, in the United States District Court for the Western District of North Carolina (Charlotte Division). On January 10, 2025, Daniel Terwilliger filed a purported derivative complaint in the United States District Court for the”Page 26 of the 2025 FDD, Item 3
Genesee County Employees' Retirement System v. Driven Brands Holdings Inc., et al.
pending
Driven Brands Holdings Inc. · filed 2023-12-22 · United States District Court for the Western District of North Carolina (Charlotte Division) · 3:23-cv-00895-MOC-DCK
“Case No. 3:23-cv-00895-MOC-DCK, in the United States District Court for the Western District of North Carolina (Charlotte Division). On December 22, 2023, Genesee County Employees’ Retirement System filed a putative class action lawsuit in the U.S. District Court for the Western District of North Carolina”Page 25 of the 2025 FDD, Item 3

Concluded (4)

Automobile B.W. Inc., MW Auto Collision Inc., Atelier de DeBosselage East End Inc. and EW Auto Collision Inc. v. Carstar Canada SPV LP
settled
Brought by a franchisee · Carstar Canada SPV LP (the current franchisor of CARSTAR Facilities in Canada) · filed 2024-07-03 · Superior Court of Quebec (Civil Division) · 500-17-130613-246
“On July 3, 2024, former franchisees filed an action against CARSTAR Canada, the current franchisor of CARSTAR Facilities in Canada, seeking CAN$938,748, plus interest and indemnity.”Page 27 of the 2025 FDD, Item 3
Outcome: “On May 26, 2025, the former franchisees and CARSTAR Canada, without admitting any wrongdoing, entered into a settlement agreement and release, under the terms of which: (a) CARSTAR Canada agreed to pay the former franchi”
New York v. Dunkin' Brands, Inc.
concluded
Government or regulatory action · Dunkin' Brands, Inc. (DBI) · filed 2019-09-26 · N.Y. Supreme Court for New York County · 451787/2019
“New York v. Dunkin’ Brands, Inc. (N.Y. Supreme Court for New York County, Case No. 451787/2019, filed September 26, 2019). In this matter, the N.Y. Attorney General (the “NYAG”) filed a lawsuit against our affiliate, DBI, related to credential-stuffing cyberattacks during 2015 and 2018.”Page 29 of the 2025 FDD, Item 3
Outcome: “Under consent order, DBI agreed to pay $650,000 in penalties and costs, issue certain notices and other types of communications to New York customers, and maintain a comprehensive information security”
The People of the State of California v. Arby's Restaurant Group, Inc.
settled
Government or regulatory action · Arby's Restaurant Group, Inc. · filed 2019-03-19 · California Superior Court, Los Angeles County · 19STCV09397
“Case No. 19STCV09397, filed March 19, 2019). On March 11, 2019, our affiliate, Arby’s Restaurant Group, Inc. (“ARG”), entered into a settlement agreement with the states of California”Page 28 of the 2025 FDD, Item 3
The People of the State of California v. Dunkin' Brands, Inc.
settled
Government or regulatory action · Dunkin' Brands, Inc. · filed 2019-03-19 · California Superior Court, Los Angeles County · 19STCV09597
“Los Angeles County, Case No. 19STCV09597, filed March 19, 2019). On March 14, 2019, our affiliate, Dunkin Brands, Inc. (“DBI”), entered into a settlement agreement with the Attorneys General of 13 states and jurisdictions concerning the inclusion of “no-poaching”Page 28 of the 2025 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

Parent company involved in multiple pending litigation matters including putative class action securities fraud and five derivative complaints against officers/board members, indicating governance and disclosure concerns
Three franchisor-initiated breach of contract and non-compete lawsuits indicate aggressive enforcement and potential disputes over territory/operational control
Affiliate settlements (Arby's, Dunkin') on no-poaching and data privacy suggest systemic corporate compliance issues that may extend to CARSTAR operations

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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