FDD Items 3 & 4 · 2026 filing

Chem-Dry litigation history

What Chem-Dry 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 (litigation) & 4 (bankruptcy) at a glance

What the filing discloses

Cases disclosed: 6; 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: 2026; Disclosures cover the prior ten years

Extracted from the 2026 Franchise Disclosure Document

Item 3: litigation

3 pending cases (1 franchisee vs CDI alleging breach of contract/TCPA/fraud re Green Certification; 2 CDI vs former franchisees for post-termination covenant violations/trademark infringement); 3 prior cases (2 settled trademark/competition matters, 1 settled for $225,000 involving breach of contract/fiduciary duties allegations by former franchisee)

Item 3 (litigation) · 6 matters disclosed · 3 pending listed

Litigation cases

The franchisor

Pending (3)

Carpet Restorations, LLC v. Chem-Dry, Inc. f/k/a Harris Research, Inc.
pending
Brought by a franchisee · filed 2025-07-31 · American Arbitration Association · AAA No. 01-25-0003-6438
“… AAA No. 01-25-0003-6438 (Filed July 31, 2025).”Page 14 of the 2026 FDD, Item 3
Outcome: “The arbitrator granted a motion to dismiss in part. The case is currently in discovery.”
Chem-Dry, Inc. v. A&S Concepts, Inc., Anthony Trevino, and Shelley Trevino
pending
Brought by the franchisor · filed 2025-03-25 · U.S. Dist. Ct., M.D. Tenn. · 3:25-cv-00338
“Chem-Dry, Inc. v. A&S Concepts, Inc., Anthony Trevino, and Shelley Trevino”Page 14 of the 2026 FDD, Item 3
Outcome: “Default was entered against A&S Concepts, Inc., Anthony Trevino, and Shelley Trevino. A motion for default judgment is currently pending.”
Chem-Dry, Inc. v. B-Line Holdings, Inc. and Stanley Lineberry
pending
Brought by the franchisor · filed 2025-04-03 · U.S. Dist. Ct., M.D. Tenn. · 3:25-cv-00378
“… Case No. 3:25-cv-00378 (U.S. Dist. Ct., M.D. Tenn.) (Filed April 3, 2025).”Page 14 of the 2026 FDD, Item 3
Outcome: “The court entered default on the former franchisees for failure to answer the complaint, and CDI is preparing to file a motion for entry of default judgment.”

Concluded (3)

Chem-Dry, Inc. v. Desert Carpet Cleaners Inc. and Ofir Asis
settled
Brought by the franchisor · filed 2025-08-11 · U.S. Dist. Ct., D. Nev. · 2:25-cv-01469
“… Case No. 2:25-cv-01469 (U.S. Dist. Ct., D. Nev.) (Filed August 11, 2025).”Page 15 of the 2026 FDD, Item 3
Outcome: “The parties settled the matter requiring Desert Carpet Cleaners Inc. and Ofir Asis to permanently disable the website at issue”
Chem-Dry, Inc., v. SSCD, Inc., Walter Shipman, and Betsy Shipman
settled
Brought by the franchisor · filed 2025-02-10 · US Dis. Ct. · 1:25-cv-01401
“… Case No. 1:25-cv-01401 (US Dis. Ct., Filed Feb. 10, 2025).”Page 15 of the 2026 FDD, Item 3
Outcome: “The parties reached a settlement whereby the defendants are enjoined from operating a competitive business”
Hospitality Future Labs, LLC and Adam Schroder v. Harris Research, Inc., et al., with the parallel arbitration HRI v. Hospitality Future Labs, LLC and Adam Schroder
settled
Brought by a franchisee · filed 2022-03-24 · Circuit Court of Hawaii, Second Circuit, with a parallel American Arbitration Association proceeding · 22-0000081 (court); AAA No. 01-21-0004-1006 (arbitration)
“Hospitality Future Labs, LLC and Adam Schroder v. Harris Research, Inc., et al., No.: 22-0000081”Page 15 of the 2026 FDD, Item 3
Outcome: “The parties settled the matter on May 5, 2023, and HRI paid to Hospitality Future Labs, LLC and Adam Schroder a settlement sum of $225,000.”

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

Aggressive litigation posture: Franchisor actively pursuing breach and IP claims against franchisees; three prior trademark/covenant disputes indicate systemic relationship deterioration

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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