FDD Items 3 & 4 · 2026 filing

Fresh Coat litigation history

What Fresh Coat 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: 4; 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: 2026; Disclosures cover the prior ten years

Extracted from the 2026 Franchise Disclosure Document

Item 3: litigation

Two enforcement actions by franchisor against former franchisees (one settled for $165,216; one arbitration dismissed upon transfer); two consent orders with California DFPI (officer bankruptcy non-disclosure and CPA registration issue); Virginia settlement order regarding officer bankruptcy non-disclosure; and affiliate Virginia settlement order (Growth Coach officer bankruptcy)

Item 3 (litigation) · 4 matters disclosed

Litigation cases

The franchisor

Concluded (4)

F.C. Franchising Systems Inc. v. 3CJR Painting, LLC and Albert Hudson
concluded
Brought by a franchisee · filed 2024-05-15 · American Arbitration Association · AAA 01-24-0005-4664
“… AAA Case No. 01-24-0005-4664 (May 15, 2024).”Page 11 of the 2026 FDD, Item 3
Outcome: “We dismissed the arbitration on March 8, 2025 upon the franchisee’s transfer of the franchised business to a new owner.”
F.C. Franchising Systems, Inc. v. Blue Barn Painting Company, LLC, and Eric Heipel
concluded
Brought by the franchisor · filed 2024-03-28 · U.S. District Court for the Southern District of Ohio · 1:24-cv-00172
“… (S.D. Ohio March 28, 2024) Case No. 1:24-cv-00172.”Page 10 of the 2026 FDD, Item 3
Outcome: “We agreed to dismiss the lawsuit on May 23, 2024 in consideration for a payment of $165,216.22 from the former franchise owner.”
Commissioner of Financial Protection and Innovation v. G.C. Franchising Systems, Inc.; C.T. Franchising Systems, Inc; F.C. Franchising Systems, Inc.; T.B. Franchising Systems, Inc.; Pet Wants Franchise System, LLC
concluded
Government or regulatory action · California Commissioner of Financial Protection and Innovation
“… We and our affiliates entered into a Consent Order with the California Commissioner of Financial Protection and Innovation on July 20, 2021”Page 11 of the 2026 FDD, Item 3
Outcome: “Pursuant to the Consent Order, we agreed to comply with the Corporations Code.”
Commonwealth of Virginia v. F.C. Franchising Systems, Inc.
concluded
Government or regulatory action · Virginia State Corporation Commission's Division of Securities and Retail Franchising · SEC-2020-00036
“… Case No. SEC-2020-00036. We entered into a Settlement Order with the Virginia State Corporation Commission's Division of Securities and Retail Franchising on March 3, 2021.”Page 11 of the 2026 FDD, Item 3
Outcome: “We agreed to offer to refund the initial franchise fees of three purchasers, offer a refund and rescission of the franchise agreement to another owner, and pay the Division $8,000 in costs/penalties. The three franchise purchasers accepted the refund offers; the franchise owner declined the rescission offer and continued to operate its franchise.”

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 regulatory settlements involving non-disclosure of officer bankruptcies (Virginia, California, Virginia affiliate) suggesting potential governance/transparency issues
Aggressive litigation posture: two franchisor-initiated enforcement actions against franchisees signal potential relationship friction

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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