FDD Items 3 & 4 · 2026 filing
Class 101 litigation history
What Class 101 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
- $5.0M
- 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 distinct concluded litigation/regulatory matters disclosed across Class 101 and its affiliates: (1) Unleashed Services, LLC v. Pabin (breach of contract/fraud dispute, settled with Unleashed Brands buying back Pabin's ownership interest for $275,000); (2) Snapology Maryland Securities Commissioner consent order for unregistered franchise sales; (3) UATP Management v. Leap of Faith Adventures (breach of contract/trade secrets dispute settled for $5,000,000 paid to LOFA); (4) California DFPI consent order against Premier Martial Arts for selling unregistered franchises ($10,000 penalty).
Disclosure signals that moved the score
How this shows up in the verdict
- Active litigation involving fraud allegations and state regulatory violations regarding franchise registration and disclosure—indicates potential FTC/state enforcement risk and franchisor credibility issues
- Going Concern status is FALSE—suggests franchisor financial instability or solvency concerns that could impact support, marketing, and system viability
- Net Income not disclosed in FDD Item 19—prevents prospective franchisees from validating profitability claims; combined with litigation, suggests franchisor unwilling or unable to substantiate earnings
- Unit growth of 23.2% YoY appears strong but context missing—unclear if growth masks franchisee churn, unit consolidation, or acquisition of competitor locations; litigation suggests potential attrition
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?