FDD Items 3 & 4 · 2022 filing

HairClub litigation history

What HairClub disclosed about lawsuits, arbitrations and bankruptcy in the 2022 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): Disclosed; Franchisor, parent, predecessor or officer

Filing year: 2022; Disclosures cover the prior ten years

Extracted from the 2022 Franchise Disclosure Document

Item 3: litigation

Three concluded matters: FTC v. Bosley (antitrust consent agreement 2013); Allan Hair Restoration franchisee lawsuit settled 2014; Paterson's Preferred Properties real estate commission suit against Frank DeCarlo settled 2021.

Item 3 (litigation) · 3 matters disclosed

Litigation cases

The franchisor

Concluded (1)

Allan Hair Restoration Enterprises, Inc., et al. v. HCM Industries, Inc., Regis Corporation, and Hair Club for Men, Ltd.
settled
Brought by a franchisee · filed 2013-03-14 · Circuit Court of the 15th Circuit for Palm Beach County, Florida · 502013CA004633XXXX MB
“… (Circuit Court of the 15th Circuit for Palm Beach County, Florida, Civil Case No. 502013CA004633XXXX MB) filed March 14, 2013.”Page 13 of the 2022 FDD, Item 3
Outcome: “A Joint Stipulation and Order for Dismissal with Prejudice was filed on August 4, 2014. Paterson’s Preferred Properties, Inc., d/b/a Alpha Realty & Auction v. NCVA Developers, LLC, Frank DeCarlo, and Grayson O. Stamey, Jr. (Superior Court, Mecklenburg County, North Carolina, Civil Action No. 20-CVS-5849, filed April 14, 2020).” (page 14)

Parent, affiliates, master franchisor and subfranchisor

Concluded (1)

Federal Trade Commission v. Bosley, Inc., Aderans America Holding Inc., and Aderans Co. Ltd.
concluded
Government or regulatory action · Bosley, Inc. (affiliate), Aderans America Holding Inc. (AAH, a parent) and Aderans Co. Ltd. (Aderans, ultimate parent) · filed 2013-05-30 · Federal Trade Commission · FTC File No. 121-0184
“… (FTC File No. 121-0184, May 30, 2013).”Page 13 of the 2022 FDD, Item 3
Outcome: “The FTC and Bosley agreed to a consent agreement, under which Bosley agreed to stop sharing “sensitive information” with any competitor or soliciting sensitive information from a competitor, agreed to establish and maintain a formal antitrust compliance program for its officers and directors for 20 years (through May 2033), and required certain reporting to the FTC.”

Officers and directors (individuals, not the company)

Concluded (1)

Paterson’s Preferred Properties, Inc., d/b/a Alpha Realty & Auction v. NCVA Developers, LLC, Frank DeCarlo, and Grayson O. Stamey, Jr.
settled
Frank DeCarlo (Vice President Production and Research, Item 2) · filed 2020-04-14 · Superior Court, Mecklenburg County, North Carolina · 20-CVS-5849
“… (Superior Court, Mecklenburg County, North Carolina, Civil Action No. 20-CVS-5849, filed April 14, 2020).”Page 14 of the 2022 FDD, Item 3
Outcome: “A Settlement Agreement was entered into on September 2, 2021, whereby Mr. DeCarlo paid the Plaintiff $12,500. The case was voluntarily dismissed with prejudice as to Mr. DeCarlo, and without prejudice as to NCVA Developers, LLC and Grayson O. Stamey, Jr., on September 20, 2021.”

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.

Disclosed in the 2022 Franchise Disclosure Document

Item 4: bankruptcy

Affiliate Aderans France SAS filed declaration of cessation of payments and receivership in Paris Commercial Court on January 27, 2022 (Reference No. 2022005891). Matter pending as of FDD date.

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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