FDD Items 3 & 4 · 2025 filing
Flip Flop Shops litigation history
What Flip Flop Shops 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
- None stated
- Bankruptcy (Item 4)
- None
- Franchisor, parent, predecessor or officer
- Filing year
- 2025
- Disclosures cover the prior ten years
Extracted from the 2025 Franchise Disclosure Document
Item 3: litigation
1) DFPI consent order (CA government action) - FFS failed to properly disclose predecessor litigation in FDDs 2018-2022, sold 10 CA franchises while unregistered; paid $52,500 penalty, closed. 2) Vupico USA Inc. v. Flip Flop Shops Franchise Company (predecessor) - franchisee sued for fraudulent inducement; judgment against predecessor $429,581. 3) Deckers Outdoor Corp v. Romeo & Juliette, Inc. and Thomas Romeo - patent infringement; jury verdict $5,250,838; settled on appeal.
Item 3 (litigation) · 3 matters disclosed
Litigation cases
The franchisor and its predecessor
Concluded (2)
In the Matter of The Commissioner of the Department of Financial Protection and Innovation of the State of California v. Flip Flop Shops, LLC
concludedGovernment or regulatory action · filed 2023 · California Department of Financial Protection and Innovation
“… (Sacramento, California) July 2023.”Page 11 of the 2025 FDD, Item 3
Vupico USA INC v. Flip Flop Shops Franchise Company, LLC
judgmentBrought by a franchisee · Flip Flop Shops Franchise Company, LLC (predecessor) · filed 2016-06-17 · Superior Court of California, County of San Diego · 37-2016-00020530-CU-NP-CTL
“… No. 37-2016-00020530-CU-NP-CTL (Superior Court of California, County of San Diego, CA) filed June 17, 2016.”Page 12 of the 2025 FDD, Item 3
Officers and directors (individuals, not the company)
Concluded (1)
Deckers Outdoor Corporation v. Romeo and Juliette, Inc. et al.
settledBrought by a third party · Thomas A. Romeo (Item 2) and Romeo & Juliette, Inc. · filed 2015-04-16 · U.S. District Court, Central District of California; U.S. Court of Appeals for the Federal Circuit · 2:15-cv-02812-TJH-PLA; 18-2386
“Deckers Outdoor Corporation v. Romeo and Juliette, Inc. et al, No. 2:15-cv-02812-TJH-PLA (United States District Court, Central District of California) filed April 16, 2015.”Page 12 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.
Disclosure signals that moved the score
How this shows up in the verdict
- Multiple litigation matters including fraud allegations against predecessor, California DFPI consent order for registration violations, and patent infringement suit against CEO create legal/reputational 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?