FDD Items 3 & 4 · 2025 filing
Cookies By Design litigation history
What Cookies 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 & 4 at a glance
What the filing discloses
- Cases disclosed
- 2
- Item 3, as counted in the filing
- Largest disclosed settlement
- None stated
- Bankruptcy (Item 4)
- Disclosed
- Franchisor, parent, predecessor or officer
- Filing year
- 2025
- Disclosures cover the prior ten years
Extracted from the 2025 Franchise Disclosure Document
Item 3: litigation
Two matters disclosed: (1) Cakes By Design Inc. v. Cookies By Design Inc. et al. (Federal Court, Toronto, Canada, 2024) - IP infringement claim against predecessor and former franchisee, seeking >$50,000; franchisor is not a party. (2) Cookie Bouquet of Houston et al. v. Designed Cookies Inc. et al. (Harris County, TX, 2023) - former franchisees claiming FTC rule violations, fraud, breach of contract, and other claims against predecessor, seeking >$1,000,000.
Disclosed in the 2025 Franchise Disclosure Document
Item 4: bankruptcy
Officers Andrew Berger and David Polonitza were officers/directors of Cosi, Inc. which filed Chapter 11 in September 2016 (emerged May 2017) and again in February 2020 (reinstated July 2022, plan confirmed July 2022, effective August 2022).
Disclosure signals that moved the score
How this shows up in the verdict
- Dual litigation against predecessor franchisor: IP infringement claim in Canada plus Texas class action alleging breach of contract, fraud, and FTC violations creates legal/reputational risk and potential successor liability
- Going concern status indicates franchisor financial instability, raising questions about support, marketing, and system longevity
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?