FDD Items 3 & 4 · 2022 filing
DQ Treat litigation history
What DQ Treat disclosed about lawsuits, arbitrations and bankruptcy in the 2022 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
- 14
- Item 3, as counted in the filing
- Largest disclosed settlement
- $425K
- As stated in Item 3
- Bankruptcy (Item 4)
- None
- Franchisor, parent, predecessor or officer
- Filing year
- 2022
- Disclosures cover the prior ten years
Extracted from the 2022 Franchise Disclosure Document
Item 3: litigation
Pending cases include subcontractor suits (Denney Mechanical, Beristain Roofing) alleging misrepresentation; ADQ v. Wineinger (declaratory judgment re transfer conditions); Oakland Family Restaurants v. ADQ (territory division/assignment). Concluded cases include settled class actions over flexed sales promotion fees, encroachment arbitration, wrongful termination disputes. Franchise-relationship actions: 3 ADQ enforcement actions (McMath x2, Yogikrupa).
Disclosure signals that moved the score
How this shows up in the verdict
- Multiple litigation cases involving subcontractor disputes, encroachment conflicts, and contract termination suggest franchisor operational/payment issues
- Going Concern = False is ambiguous; if this means financial distress, it signals franchisor viability risk
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?