FDD Items 3 & 4 · 2026 filing
Fuzzy’s Taco Shop litigation history
What Fuzzy’s Taco Shop 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 & 4 at a glance
What the filing discloses
- Cases disclosed
- 3
- Item 3, as counted in the filing
- Largest disclosed settlement
- $426K
- As stated in Item 3
- Bankruptcy (Item 4)
- Disclosed
- Franchisor, parent, predecessor or officer
- Filing year
- 2026
- Disclosures cover the prior ten years
Extracted from the 2026 Franchise Disclosure Document
Item 3: litigation
Three arbitration proceedings (AAA) filed by FTO against franchisees in 2023-2024 for unauthorized/unilateral restaurant closures in breach of franchise agreements; FTO obtained awards of $243,119.45 (May 2024) and $425,810 (Feb 2025) in two of the cases; the third (Red Oak et al.) remains in discovery.
Disclosed in the 2026 Franchise Disclosure Document
Item 4: bankruptcy
Vance Chang, CFO of Dine Brands and franchisor, was previously CFO of YogaWorks, Inc., which filed Chapter 11 bankruptcy on October 14, 2020 in the U.S. Bankruptcy Court for the District of Delaware due to COVID-19-related business pressures; Chang left YogaWorks in November 2019.
Disclosure signals that moved the score
How this shows up in the verdict
- Going concern status = False indicates potential financial instability at corporate level affecting support and longevity
- 5% royalty on $1.59M average revenue = $79,500 annual franchisor take; insufficient to support multi-unit litigation and operations
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?