FDD Items 3 & 4 · 2024 filing
Everhome Suites litigation history
What Everhome Suites 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 & 4 at a glance
What the filing discloses
- Cases disclosed
- 3
- Item 3, as counted in the filing
- Largest disclosed settlement
- $779K
- As stated in Item 3
- 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 pending matters: (1) Norma Knuth Canadian class action re destination marketing fees ($403M demand); (2) Jai Sai Baba multi-franchisee federal suit alleging discrimination/antitrust/RICO (stayed, sub-arbitration with DIP Hospitality pending award); (3) T&T Management breach of license/trade secrets claim. Section II discloses approximately 50+ royalty recovery and IP enforcement actions filed in 2023. Resolved cases include Wydredge (settled 2014), Sender Kohl ($85K settlement 2021), Highmark ($779K judgment against Choice 2024), and Dahya (net judgment in Choice's favor 2024).
Disclosure signals that moved the score
How this shows up in the verdict
- Active litigation from franchisor (Choice Hotels) pursuing 85+ royalty recovery actions suggests systemic franchisee default/failure and aggressive collection tactics
- No Item 19 financial performance disclosure combined with going concern=False signals either undisclosed losses or franchisor unwillingness to document unit profitability
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?