FDD Items 3 & 4 · 2026 filing

Cornwell Quality Tools litigation history

What Cornwell Quality Tools 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 (litigation) & 4 (bankruptcy) at a glance

What the filing discloses

Cases disclosed: 38; Item 3, as counted in the filing

Largest settlement, franchisor's own cases: $5.5M; 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

Two regulatory consent orders (Maryland 2010, Minnesota 2014) for franchising with expired registrations. Salinas class action settled $5.5M (California employee misclassification, concluded 2024). Felger and Hudson data breach cases pending (settlement in principle January 2025). Karrip counterclaim dismissed. Cornwell filed approximately 24 collection suit matters against former franchisees for unpaid inventory.

Item 3 (litigation) · 38 matters disclosed · 3 pending listed

Litigation cases

The franchisor

Pending (3)

Cornwell Quality Tools Company v. Daniel Karrip, Mary Karrip, and DK Tool Sales, Inc.
pending
Brought by a franchisee · filed 2023-10-31 · Circuit Court for the County of Kent, Michigan · 23-08728-CZ
“… Case No. 23-08728-CZ in the Circuit Court for the County of Kent, Michigan, was filed on October 31, 2023, by the Defendants as a Counterclaim to a Complaint brought by Cornwell on September 6, 2023, to confirm an arbitration award made in Cornwell’s favor against the Defendants on August 11, 2023.”Page 16 of the 2026 FDD, Item 3
Outcome: “The defendants filed an appeal from all of the Court’s rulings on January 23, 2024, which remains pending.”
James Felger v. The Cornwell Quality Tools Company
pending
filed 2023-09-13 · United States District Court for the Northern District of Ohio · 1:23-cv-01786
“… Case No. 1:23-cv-01786 in the United States District Court for the Northern District of Ohio, was filed on September 13, 2023.”Page 16 of the 2026 FDD, Item 3
Outcome: “The matters remain pending. However, a settlement in principle was reached as to both matters on January 28, 2025, to be paid entirely by Cornwell’s insurance carriers. The completion of the settlement remains pending.”
William Hudson v. The Cornwell Quality Tools Company
pending
filed 2023-09-28 · United States District Court for the Northern District of Ohio · 1:23-cv-01887
“… Case No. 1:23-cv-01887 in the United States District Court for the Northern District of Ohio, was filed on September 28, 2023. The Complaints in both cases were brought by individuals for themselves and as the claimed representatives of putative defined classes of persons.”Page 16 of the 2026 FDD, Item 3
Outcome: “The matters remain pending. However, a settlement in principle was reached as to both matters on January 28, 2025, to be paid entirely by Cornwell’s insurance carriers. The completion of the settlement remains pending.”

Concluded (6)

Randy Salinas v. The Cornwell Quality Tools Company
settled
Brought by a franchisee · filed 2019-10-10 · Superior Court for the County of Riverside, California; removed to the United States District Court for the Central District of California · RIC 1905144; 5:19-cv-02275-JGB
“… Case No. RIC 1905144 in the Superior Court for the County of Riverside, California, was filed on October 10, 2019. Cornwell removed the case to the United States District Court for the Central District of California on November 27, 2019, where it was assigned Case No. 5:19-cv- 02275-JGB.”Page 15 of the 2026 FDD, Item 3
Outcome: “Cornwell denies all of the allegations of the Complaint but nevertheless recognized that it had some potential exposure and so entered into a settlement agreement, involving payments to the Class members and their counsel of $5.5 million, as a matter of prudent business judgment.” (page 16)
Eric Lange, et al. v. The Cornwell Quality Tools Company
dismissed
Brought by a franchisee · filed 2015-05-01 · United States District Court for the Northern District of Ohio · 5:15-cv-00859-JRA
“… Case No. 5:15-cv-00859-JRA in the United States District Court for the Northern District of Ohio, was filed on May 1, 2015. The lawsuit was brought by the same nine former Cornwell dealers as individuals and as claimed representatives of the putative class of all former Cornwell dealers”Page 15 of the 2026 FDD, Item 3
Outcome: “Cornwell moved to dismiss the lawsuit on grounds of collateral estoppel on May 21, 2015. The motion was granted on December 31, 2015, and the lawsuit was dismissed.”
David Bachrach, et al. v. The Cornwell Quality Tools Company
dismissed
Brought by a franchisee · filed 2011-10-21 · American Arbitration Association · 11 114 Y 01759 11
“… Case No. 11 114 Y 01759 11 in the American Arbitration Association, was filed on October 21, 2011. The Demand was brought by nine former Cornwell dealers as individuals and as claimed representatives of the putative class of all former Cornwell dealers”Page 15 of the 2026 FDD, Item 3
Outcome: “The arbitration was voluntarily dismissed by the claimants on May 18, 2015, without any payment or other consideration from Cornwell.”
David Bachrach, et al. v. The Cornwell Quality Tools Company
dismissed
Brought by a franchisee · filed 2010-01-27 · Court of Common Pleas of Summit County, Ohio · 2010 01 0543
“… Case No. 2010 01 0543 in the Court of Common Pleas of Summit County, Ohio, was filed on January 27, 2010. The Complaint was brought by eight former Cornwell dealers as individuals and as claimed representatives of the putative class of all former Cornwell dealers terminated within four years of the filing of the Complaint.”Page 14 of the 2026 FDD, Item 3
Outcome: “The matter was voluntarily dismissed by the plaintiffs on May 6, 2015, without any payment or other consideration from Cornwell.” (page 15)
In the Matter of Cornwell Quality Tools Company
concluded
Government or regulatory action · Securities Commissioner of Maryland · 2010-0375
“… (Maryland Case No. 2010-0375) On November 3, 2010, Cornwell entered into a Consent Decree with the Securities Commissioner of Maryland to resolve issues arising from entering into franchise agreements in Maryland even though the renewal of Cornwell's registration in 2008 had not been approved and thus had expired.”Page 14 of the 2026 FDD, Item 3
Outcome: “Cornwell paid a civil penalty of $10,000.00, offered the rescission of franchises entered into after the registration expiration and has implemented procedures to reduce the risk of future violations.”
In the Matter of The Cornwell Quality Tools Company
concluded
Government or regulatory action · Minnesota Department of Commerce (Commissioner of Commerce of Minnesota) · FR1400020
“… (Minnesota Department of Commerce Case No. FR1400020) On August 19, 2014, a Consent Order was issued against Cornwell by the Commissioner of Commerce of Minnesota. The Order resolved issues arising from Cornwell’s offering and entering into franchise agreements in Minnesota even though the renewal of Cornwell's registration in 2012”Page 14 of the 2026 FDD, Item 3
Outcome: “Cornwell paid a civil penalty of $2,000.00, offered the rescission of franchises entered into after the registration expiration and implemented procedures to reduce the risk of future violations.”

Status not stated in the filing (6)

Cornwell Quality Tools Company v. Cameron J. Balmain
Brought against a franchisee · filed 2024-06-18 · United States Bankruptcy Court, District of Massachusetts, Eastern Division · 24-11209
“… United States Bankruptcy Court, District of Massachusetts, Eastern Division, Chapter 7 case filed 06/18/2024 (Case No. 24-11209).”Page 17 of the 2026 FDD, Item 3
Cornwell Quality Tools Company v. Jon W. Bachand and Laura B. Schultz
Brought against a franchisee · filed 2024-10-03 · American Arbitration Association · 01-04-0008-0655
“… American Arbitration Association case filed 10/03/2024 (Case No. 01-04-0008-0655).”Page 17 of the 2026 FDD, Item 3
Cornwell Quality Tools Company v. Raymond L. Brown, Angela D. Brown and Slappy Holdings LLC
Brought against a franchisee · filed 2024-05-03 · American Arbitration Association; 212th District Court, Galveston County, Texas · 01-24-0004-7532; 24-CV-1762
“… American Arbitration Association case filed 05/03/2024 (Case No. 01-24- 0004-7532); 212th District Court, Galveston County, Texas, case filed 10/03/2024 (Case No. 24-CV-1762).”Page 17 of the 2026 FDD, Item 3
Cornwell Quality Tools Company v. Bruce M. Alvarado, Tiffany R. Alvarado and BT&N's Tools & Equipment, LLC
Brought against a franchisee · filed 2023-11-13 · American Arbitration Association; Court of Common Pleas, Summit County, Ohio; United States Bankruptcy Court, Northern District of Texas · 01-23-0005-1380; 2024-04-1703; 24-41711
“Cornwell Quality Tools Company v. Bruce M. Alvarado, Tiffany R. Alvarado and BT&N’s Tools & Equipment, LLC, American Arbitration Association case filed 11/13/2023 (Case No. 01-23-0005-1380); Court of Common Pleas, Summit County, Ohio, case filed 04/19/2024 (Case No. 2024-04-1703); United States Bankruptcy Court, Northern District of Texas, Chapter 13 case filed 05/14/2024 (Case No. 24-41711).”Page 17 of the 2026 FDD, Item 3
Cornwell Quality Tools Company v. Joseph A. Bribiescas
Brought against a franchisee · filed 2023-11-13 · American Arbitration Association; Court of Common Pleas, Summit County, Ohio; Superior Court of Maricopa County, Arizona · 01-23-0005-1381; 2024-03-1394; CV-2024-015471
“… American Arbitration Association case filed 11/13/2023 (Case No. 01-23-0005-1381); Court of Common Pleas, Summit County, Ohio, case filed 03/28/2024 (Case No. 2024-03-1394); Superior Court of Maricopa County, Arizona, case filed 06/17/2024 (Case No. CV-2024-015471).”Page 17 of the 2026 FDD, Item 3
Cornwell Quality Tools Company v. Timothy R. Barker and Deanna Kauiohoolehua Barker
Brought against a franchisee · filed 2023-07-20 · American Arbitration Association; Court of Common Pleas, Summit County, Ohio; 116th District Court of Dallas County, Texas; Superior Court, County San Bernardino, California · 01-23-0003-2251; 2023-11-4354; DC-24-05808; CIV SB 2418172
“… American Arbitration Association case filed 07/20/2023 (Case No. 01-23-0003- 2251); Court of Common Pleas, Summit County, Ohio, case filed 11/13/2013 (Case No. 2023-11-4354); 116th District Court of Dallas County, Texas, case filed 05/01/2024 (Case No. DC-24-05808 against Deanna Kauiohoolehua Barker);”Page 17 of the 2026 FDD, Item 3

This list shows 15 of the 38 matters Item 3 discloses; the rest are in the filing.

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 class action lawsuits regarding dealer misclassification under labor laws create legal exposure and suggest franchisor control disputes
Data breach litigation indicates inadequate cybersecurity and potential customer/franchisee exposure

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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