FDD Items 3 & 4 · 2025 filing
Honest litigation history
What Honest 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
- 1
- 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
Item 3 (litigation) · 1 matter disclosed
Litigation cases
The franchisor
Status not stated in the filing (1)
Matter with no printed caption
Brought against a franchisee · filed 2024-05-24 · Circuit Court for Frederick County, Maryland · C-10-cv- 24-000393
“May 24, 2024 Circuit Court for Frederick County, Maryland C-10-cv- 24-000393 Frederick HNST LLC, Malav Vipul Patel, Mihir Vipul Patel, Ankit Mahesh Desai, Arth R. Panchal, Arpan Dipak Desai, Nilkanth Kiritkumar Patel, Suhasbhai Manubhai Patel, Harsha Panchal,”Page 10 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
- Active litigation against franchisee in May 2024 for breach of restrictive covenants suggests enforcement challenges and potential disputes over post-termination obligations
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?