FDD Items 3 & 4 · 2026 filing

Loyalty Business Services litigation history

What Loyalty Business Services 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: 10; 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 pending actions (a minority-investor suit against affiliate ATAX/Hewitt/Loyalty alleging fraud and breach of fiduciary duty; an AAA arbitration by a joint-venture partner alleging breach of contract, seeking ~$1.95M with a $225,000 counterclaim). Six concluded actions primarily involving CEO John T. Hewitt and prior company Liberty Tax/JTH Tax (trade dress/trade secrets suit settled for $545,000; two related employment/vendor suits settled for $50,000 combined; shareholder derivative suits settled without admission of liability; a Purchase-and-Sale dispute settled for $775,000). A DOJ action against an unrelated Liberty Tax entity (Hewitt not a named party) resulted in Hewitt being barred from re-employment/board nomination at Liberty Tax. A California DFPI consent order requires Hewitt to disclose the DOJ Final Order in Item 3 of any FDD where he holds a management role.

Item 3 (litigation) · 10 matters disclosed · 2 pending listed

Litigation cases

The franchisor

Pending (1)

Fortis Lux Financial, Inc. and Tutum Strategies, LLC v. Loyalty Business Services, LLC a/k/a Ledgers USA, JSM Tax, Inc. d/b/a Ledgers, USA, Loyalty, LLC d/b/a Loyalty Brands and John T. Hewitt
pending
filed 2025-05-09 · American Arbitration Association (Virginia) · 01-25-0002-2722
“… filed May 9, 2025, before the American Arbitration Association for hearing in Virginia (AAA Case No. 01-25-0002-2722).”Page 13 of the 2026 FDD, Item 3

Parent, affiliates, master franchisor and subfranchisor

Pending (1)

Ira Lubert and John Martinson v. John T. Hewitt, ATAX, LLC, and Loyalty, LLC
pending
Brought by a third party · Loyalty, LLC (our parent); ATAX, LLC (affiliate); John T. Hewitt · filed 2025-05-30 · Court of Common Pleas of Philadelphia County, Pennsylvania · 250503829
“… Court of Common Pleas of Philadelphia County, Pennsylvania, Case No. 250503829, filed May 30, 2025, amended August 19, 2025.”Page 13 of the 2026 FDD, Item 3

Concluded (1)

JTH Tax LLC d/b/a Liberty Tax Service v. John T. Hewitt, Loyalty LLC, ATAX LLC, ATAX Franchise, Inc. and Yneva Marte
settled
Brought by a third party · Loyalty LLC (our parent); ATAX (affiliate); John T. Hewitt · filed 2021-02-04 · U.S. District Court for the Eastern District of Virginia · 2:21-cv-00076-RBS-LRL
“… (Case No.2:21-cv-00076-RBS-LRL) filed February 4, 2021 in the United States District Court for the Eastern District of Virginia.”Page 14 of the 2026 FDD, Item 3
Outcome: “Under the Settlement Agreement, Defendants agreed to pay the Plaintiff $545,000 over 6 years, and to refrain from: (1) unfairly competing with Liberty Tax by tortiously interfering with its franchise agreements;”

Officers and directors (individuals, not the company)

Concluded (7)

United States of America v. Franchise Group Intermediate L 1, LLC d/b/a Liberty Tax Service
settled
Government or regulatory action · John T. Hewitt (referenced in the order; not a party) · filed 2019-12-03 · U.S. District Court for the Eastern District of Virginia · 2:19-cv-00653-RAJ-DEM
“… (Case No. 2:19-cv-00653-RAJ-DEM) filed on or around December 3, 2019 in the United States District Court for the Eastern District of Virginia.”Page 16 of the 2026 FDD, Item 3
Bablu Shahabuddin v. JTH Tax, Inc., Siempre Tax, and John Hewitt
settled
John T. Hewitt (with JTH Tax/Siempre Tax, unrelated) · filed 2018-01-11 · U.S. District Court for the Eastern District of Virginia · 2:18-cv-00016-MDS-DEM
“… (Case No. 2:18-cv-00016- MDS-DEM) filed on January 11, 2018 in the United States District Court for the Eastern District of Virginia.”Page 16 of the 2026 FDD, Item 3
RSL Senior Partners, LLC, derivatively and on behalf of Liberty Tax, Inc. v. Brunot et al.
settled
Brought by a third party · John T. Hewitt (former Liberty Tax CEO; our principal) · filed 2018-03-07 · U.S. District Court for the Eastern District of Virginia · 2:18-cv-00127-HCM-DEM
“RSL Senior Partners, LLC, derivatively and on behalf of Liberty Tax, Inc. v Brunot et al, (Case No. 2:18-cv-00127-HCM-DEM), filed on March 7, 2018, in the United States District Court for the Eastern District of Virginia.”Page 15 of the 2026 FDD, Item 3
In Re: Liberty Tax, Inc. Stockholder Litigation (consolidated Asbestos Workers’ Philadelphia Pension Fund v. John Hewitt and Erie County Employees Retirement System v. John T. Hewitt)
settled
Brought by a third party · John T. Hewitt · filed 2017-12-12 · Court of Chancery of the State of Delaware · 2017-0883; 2017-0914
“Asbestos Workers’ Philadelphia Pension Fund, derivatively on behalf of Liberty Tax, Inc., v. John Hewitt. Defendant, and Liberty Tax, Inc., Nominal Defendant, (Case No. 2017-0883), filed on December 12, 2017 in the Court of Chancery of the State of Delaware.”Page 14 of the 2026 FDD, Item 3
K&A Publicidad, Inc. v. JTH Tax, Inc., d/b/a Liberty Tax Service, Liberty Tax, Inc. d/b/a Siempre Tax and John Hewitt
settled
John T. Hewitt (with JTH Tax/Liberty Tax, unrelated) · filed 2017-09-05 · Virginia Beach Circuit Court · CL17-4169
“… (Case No. CL17-4169), filed on September 5, 2017 in the Virginia Beach Circuit Court.”Page 14 of the 2026 FDD, Item 3
Kirke Franz Szawronski v. JTH Tax, Inc., d/b/a Liberty Tax Service, Liberty Tax, Inc., d/b/a Siempre Tax and John Hewitt
settled
John T. Hewitt (with JTH Tax/Liberty Tax, unrelated) · filed 2017-09-05 · Virginia Beach Circuit Court · CL17-4170
“… (Case No. CL17-4170), filed on September 5, 2017 in the Virginia Beach Circuit Court.”Page 14 of the 2026 FDD, Item 3
In the Matter of a Consent Order between The Commissioner of Financial Protection and Innovation and John T. Hewitt
concluded
Government or regulatory action · John T. Hewitt · California Department of Financial Protection and Innovation
“… before the Commissioner of Financial Protection and Innovation for the State of California.”Page 17 of the 2026 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.

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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