FDD Items 3 & 4 · 2025 filing
Madabolic litigation history
What Madabolic 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 & 4 at a glance
What the filing discloses
- Cases disclosed
- 3
- Item 3, as counted in the filing
- Largest disclosed settlement
- $7.4M
- As stated in Item 3
- Bankruptcy (Item 4)
- None
- Franchisor, parent, predecessor or officer
- Filing year
- 2025
- Disclosures cover the prior ten years
Extracted from the 2025 Franchise Disclosure Document
Item 3: litigation
CEO Rick Del Sontro named in federal mortgage fraud civil action (settled 2018, $150K payment). Del Sontro also named defendant in 8 Zippy Shell franchisee arbitrations over territorial exclusivity violations; 7 settled in 2022 totaling ~$15.15M, 1 resulted in $1.46M award against Del Sontro and others. Washington State issued 3 consent orders against Madabolic, ZGrowth, Del Sontro and Mendoza for offering franchises prior to registration and using unregistered brokers; $6,000 investigative costs paid.
Disclosure signals that moved the score
How this shows up in the verdict
- CEO has pattern of litigation across multiple ventures (2015 mortgage crisis civil action, 2020 Zippy Shell arbitration for fraudulent induction and territory breach, 2023 Washington State unregistered broker consent orders)
- Going concern notation suggests financial instability at franchisor level, potentially impacting support, marketing, and system viability
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?