FDD Items 3 & 4 · 2026 filing

Gong cha litigation history

What Gong cha 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: $30K; As stated in Item 3

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

Four Item 3 matters, all involving franchise registration/disclosure violations by predecessor GCI (and in some cases the franchisor itself): (1) California DBO citation against GCI for offering an unregistered master franchise, settled via consent order (civil penalties of $2,500 x3); (2) civil suit/arbitration between GCI and its former CA master franchisee GCCA over renewal rights, settled with no monetary payment; (3) Maryland Securities Commissioner administrative proceeding against GCI, franchisor, and GCDMV for unregistered franchise sales, settled via consent order ($30,000 penalty plus $10,000 to GCDMV for rescinding licensees); (4) Virginia State Corporation Commission proceeding against GCI and franchisor for unregistered master franchise sale, settled with a $3,000 penalty.

Item 3 (litigation) · 4 matters disclosed

Litigation cases

The franchisor and its predecessor

Concluded (4)

Administrative Proceeding Before the Securities Commissioner of Maryland – In the Matter of: Gong Cha International Co., Ltd., Gong cha USA Franchising, LLC, and GCDMV, LLC
concluded
Government or regulatory action · filed 2024 · Securities Commissioner of Maryland · 2024-0131
“Administrative Proceeding Before the Securities Commissioner of Maryland – In the Matter of: Gong Cha International Co., Ltd., Gong cha USA Franchising, LLC, and GCDMV, LLC, Case No. 2024-0131.”Page 18 of the 2026 FDD, Item 3
Outcome: “to enter into a global consent order with the Securities Commissioner effective December 5, 2024 to settle this matter. Under the consent order, GCI and we agreed to: (a) permanently cease and desist from the offer and sale of franchises in violation of the Maryland Franchise Law, (b) pay to the” (page 19)
Commonwealth of Virginia, ex rel. State Corporation Commission v. Gong Cha International Co., Ltd. and Gong cha USA Franchising, LLC
settled
Government or regulatory action · filed 2024 · Virginia State Corporation Commission, Division of Securities and Retail Franchising · SEC-2024-00043
“… Case No. SEC-2024-00043.”Page 19 of the 2026 FDD, Item 3
Outcome: “GCI and we entered into a settlement order with the Division to settle this matter, which was approved by the State Corporation Commission on March 4, 2025.”
Gong Cha CA Franchise LLC v. Royal Tea Taiwan Co., Ltd.; Gong Cha International Co., Ltd. v. Gong Cha CA Franchise, LLC
settled
Brought by a franchisee · Gong Cha International Co., Ltd. (GCI, f/k/a Royal Tea Taiwan Co., Ltd.) · filed 2020-06-24 · Superior Court of the State of California, County of Alameda; Chinese Arbitration Association, Kaohsiung · RG20066026
“Gong Cha CA Franchise LLC v. Royal Tea Taiwan Co., Ltd., Superior Court of the State of California, County of Alameda, Case No. RG20066026;”Page 18 of the 2026 FDD, Item 3
Outcome: “On July 9, 2021, the parties settled their dispute and entered an amendment under which the Master Franchising Agreement was renewed for the first 6-year renewal term, effective as of July 1, 2021, and GCCA was granted the right to renew for one additional 6-year term following expiration of the first renewal term.”
In re Commissioner of Business Oversight v. Royal Tea Taiwan Co., Ltd.
concluded
Government or regulatory action · Gong Cha International Co., Ltd. (GCI, f/k/a Royal Tea Taiwan Co., Ltd.) · filed 2020-05-26 · California Department of Business Oversight (now Department of Financial Protection and Innovation) · Fil. Org. ID 352363
“… Fil. Org. ID 352363. On May 26, 2020, the California Department of Business Oversight (now renamed the California Department of Financial Protection and Innovation) (“Department”) issued”Page 17 of the 2026 FDD, Item 3
Outcome: “GCI entered into a consent order with the Department effective January 21, 2025. Under the consent order, GCI agreed, without admitting or denying the findings of the Department, to pay civil penalties of $2,500 for each of 3 alleged violations, and to desist and refrain from offering and selling franchises without first complying with the registration and disclosure requirements under California franchise law.” (page 18)

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

Master franchise renewal dispute with court litigation and arbitration indicates franchisor-franchisee relationship deterioration and territorial instability

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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