FDD Items 3 & 4 · 2025 filing

Closets By Design litigation history

What Closets By Design 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: 5; 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: 2025; Disclosures cover the prior ten years

Extracted from the 2025 Franchise Disclosure Document

Item 3: litigation

3 pending: (1) customer class action (Vernon v CBD); (2) competitor false advertising (Casablanca v CBD); (3) CBDF appeal against former franchisee/competitor (CBD v Central Jersey/One Day). 2 concluded: CBD v Van Alstyne (breach/bankruptcy, recovered $127K); CBD v Frank Dres (settled $320K).

Item 3 (litigation) · 5 matters disclosed · 3 pending listed

Litigation cases

The franchisor

Pending (3)

Casablanca Design Center v. Closets by Design, CBD Franchising, Inc., and Frank Melkonian
pending
Brought by a third party · filed 2023-03-22 · U.S. District Court, Central District of California · 2:23-cv-02155
“… (U.S. District Court, Central District of California, Case No. 2:23-cv-02155) On March 22, 2023, Casablanca Design Center, Inc. (“Casablanca”), an affiliate of the One”Page 8 of the 2025 FDD, Item 3
Corlis Vernon v. Closets by Design, Inc. and CBD Franchising, Inc.
pending
Brought by a third party · filed 2023-08-07 · U.S. District Court, Western District of Washington · 2:23-cv-01180-JNW
“… (U.S. District Court, Western District of Washington, Case No. 2:23-cv-01180-JNW) On August 7, 2023, Corlis Vernon (“Vernon”), the customer of a franchisee, filed a complaint in the United”Page 8 of the 2025 FDD, Item 3
CBD Franchising, Inc. v. Central Jersey Doors & Closets, LLC; Mary Conway; William Conway; One Day Doors & Closets, Inc., and One Day Enterprises, LLC
pending
Brought against a franchisee · filed 2017-07-05 · New Jersey Superior Court; Los Angeles Superior Court; California Court of Appeal, 2nd Appellate District · 22STCV13457; B342711
“… (Los Angeles Superior Court Case No. 22STCV13457) (Court of Appeal, 2nd Appellate District Case No. B342711)”Page 9 of the 2025 FDD, Item 3

Concluded (2)

CBD Franchising, Inc. v. Frank Dres, Wilhelm Dres, 9209011 Canada Inc., 10277959 Canada Inc.
settled
Brought against a franchisee · filed 2022-02-28 · U.S. District Court, Central District of California · 8:22-cv-00313-ADS
“… (U.S. District Court, Central District of California, Case No. 8:22-cv-00313-ADS).”Page 10 of the 2025 FDD, Item 3
Outcome: “the Parties reached a conditional settlement as to all claims, whereby Defendants Frank Dres and Wilhelm Dres agreed to pay CBDF $320,000 in a series of scheduled payments, the last of which was made on April 10, 2025.” (page 11)
CBD Franchising, Inc. v. Van Alstyne, et al.
dismissed
Brought against a franchisee · filed 2020-08-11 · U.S. District Court, Central District of California · 8:20-cv-01491-JVS-DFM
“… United States District Court for the Central District of California (U.S. District Court, Central District of California, Case No. 8:20-cv-01491-JVS-DFM) On August 11, 2020, CBDF filed a Complaint in the U.S.”Page 10 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

Multiple active litigations including consumer class action, RICO allegations, and non-compete disputes signal systemic operational/compliance issues
History of concluded litigation over unpaid royalties and abandonment indicates franchisor-franchisee relationship breakdown

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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