FDD Items 3 & 4 · 2025 filing

Corner Bakery Cafe litigation history

What Corner Bakery Cafe 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: 3; Item 3, as counted in the filing

Largest settlement, franchisor's own cases: $974K; As stated in Item 3

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

Three Item-3 matters disclosed: (1) Nerco, LLC et al. v. Voodoo Licensing Southern, LLC et al. (S.D. Ala.), a pending action involving VP of Franchise Development Thomas Harper's prior role, alleging fraud/breach; settlement conference scheduled April 2025. (2) State of Delaware ex rel. French v. Card Compliant, LLC et al. — qui tam gift-card action against predecessor CBC, settled 2018 ($700,000). (3) Buon Hospitality, Inc. v. CBC Restaurant Corp. et al. — franchisee FPR/fraud suit against predecessor, settled 2015 (CBC paid $974,498.52).

Item 3 (litigation) · 3 matters disclosed · 1 pending listed

Litigation cases

The franchisor and its predecessor

Concluded (2)

Buon Hospitality, Inc. v. CBC Restaurant Corp., Michael J. Hislop, James D. Vinz, John A. LaBarge and Gary Price
settled
Brought by a franchisee · CBC Restaurant Corp. (our predecessor) and individuals · filed 2014-12-05 · Superior Court of California, Alameda County · RG14750440
“… Case No. RG14750440, Superior Court of California, Alameda County.”Page 10 of the 2025 FDD, Item 3
Outcome: “CBC agreed to pay Buon $974,498.52, (iii) both parties agreed to a general release of all claims against the other party, and (iv) both parties agreed that the settlement would not be construed as an admission of liability or wrongdoing of any kind.”
The State of Delaware, ex. rel. William S. French vs. Card Compliant, LLC, et al.
settled
Government or regulatory action · CBC Restaurant Corp. (our predecessor) · filed 2013-06-28 · New Castle County Superior Court, Delaware · N13C- 06-289 FSS
“… Case No. N13C- 06-289 FSS, New Castle County Superior Court, Delaware.”Page 9 of the 2025 FDD, Item 3
Outcome: “the Relator and the State of Delaware were to be paid $700,000, (ii) the parties agreed to a general release of all claims, and (iii) the parties agreed that the settlement would not be construed as an admission of liability or wrongdoing.” (page 10)

Officers and directors (individuals, not the company)

Pending (1)

Nerco, LLC et al v. Voodoo Licensing Southern, LLC et al.
pending
Brought by a franchisee · Thomas Harper (our Vice President of Franchise Development) · filed 2024-12-12 · United States District Court for the Southern District of Alabama · 1:25-cv-00069- JB-B
“… Civil Action No. 1:25-cv-00069- JB-B (United States District Court for the Southern District of Alabama).”Page 9 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.

Disclosed in the 2025 Franchise Disclosure Document

Item 4: bankruptcy

The filing discloses a bankruptcy involving the franchisor, its parent, a predecessor or an officer. Read Item 4 of the FDD for the party, the court and the dates.

Disclosure signals that moved the score

How this shows up in the verdict

Pending litigation against VP of Franchise Development involving fraud allegations raises concerns about sales practices and disclosed financial projections to prospective franchisees
Two prior settled litigations involving gift card reporting and unauthorized financial performance representations indicate pattern of regulatory/disclosure issues

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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