FDD Items 3 & 4 · 2024 filing

Compass by Margaritaville litigation history

What Compass by Margaritaville disclosed about lawsuits, arbitrations and bankruptcy in the 2024 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: 3; 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: 2024; Disclosures cover the prior ten years

Extracted from the 2024 Franchise Disclosure Document

Item 3: litigation

Three matters: (1) Boss Investments Ltd. v. Margaritaville entities — trademark sub-license dispute, settled January 2021 with corporate defendants paying 50% of future food/beverage royalties from Bahamian Hotel; (2) Shultz et al. v. Margaritaville Enterprises et al. — cottage owner tort claims, dismissed with prejudice April 2023, mutual walk-away; (3) California DFPI consent order against Margaritaville Hotels & Resorts for failure to file exemption notices for three California franchise sales, resolved March 2020 with $7,500 penalty.

Item 3 (litigation) · 3 matters disclosed

Litigation cases

Parent, affiliates, master franchisor and subfranchisor

Concluded (3)

Stephen W. and Catherine C. Shultz, as Co-Trustees of the Stephen and Catherine Shultz Trust Dated January 9, 2006; Alesandra D. Shultz, as Trustee of the Alesandra D. Shultz Living Trust U/A/D April 12, 2018; and John D. Koptieff, and Wife, Susan C. Koptieff v. Margaritaville Enterprises, LLC; John
settled
Margaritaville Enterprises, LLC (our parent), John Cohlan and James Wiseman · filed 2020 · Circuit Court of the Ninth Judicial Circuit in and for Osceola County, Florida · 2020 CA 00051 OC
“Stephen W. and Catherine C. Shultz, as Co-Trustees of the Stephen and Catherine Shultz Trust Dated January 9, 2006; Alesandra D. Shultz, as Trustee of the Alesandra D. Shultz Living Trust U/A/D April 12, 2018; and John D. Koptieff, and Wife, Susan C. Koptieff v. Margaritaville Enterprises, LLC;”Page 16 of the 2024 FDD, Item 3
Outcome: “The case was dismissed with prejudice on April 27, 2023. The Commissioner of Financial Protection and Innovation v. Margaritaville Hotels & Resorts, LLC (Administrative Proceeding Before the Department of Financial Protection and Innovation, State of California).”
The Commissioner of Financial Protection and Innovation v. Margaritaville Hotels & Resorts, LLC
concluded
Government or regulatory action · Margaritaville Hotels & Resorts, LLC (MHR, affiliate) · filed 2020-03-07 · Department of Financial Protection and Innovation, State of California
“… (Administrative Proceeding Before the Department of Financial Protection and Innovation, State of California).”Page 16 of the 2024 FDD, Item 3
Boss Investments Limited a/k/a Boss Investments Ltd. v. Margaritaville of Bahamas, LLC, Margaritaville Enterprises, LLC, Margaritaville Holdings LLC, and James Wiseman
settled
Margaritaville Enterprises, LLC and Margaritaville Holdings LLC (our parents) · filed 2018-10-26 · Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida · 2018-Ca-013658
“… (Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, Case No. 2018-Ca-013658).”Page 15 of the 2024 FDD, Item 3
Outcome: “the case was voluntarily dismissed with prejudice as of January 8, 2021. Without admitting any liability for the claims, under the Settlement Agreement, the corporate defendants agreed to pay to Boss 50 percent of future royalties from food and beverage, and certain merchandise, from the Bahamian Hotel.” (page 16)

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 litigation cases including trademark disputes, deceptive practices lawsuits, and regulatory compliance failures (California administrative consent order 2020)

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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