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 (litigation) & 4 (bankruptcy) at a glance

What the filing discloses

Cases disclosed: 12; 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

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.

Item 3 (litigation) · 12 matters disclosed

Litigation cases

The franchisor

Concluded (1)

Consent Order, State of Washington Department of Financial Institutions, Securities Division (Division). In the matter of determining whether there has been a violation of the Franchise Investment Protection Act by Madabolic Franchise System, LLC, Respondent.
concluded
Government or regulatory action · filed 2023-09-29 · State of Washington Department of Financial Institutions, Securities Division · S-23-3612-23-CO02
“… Order Number: S-23-3612-23-CO02, September 29, 2023;”Page 13 of the 2025 FDD, Item 3
Outcome: “The Consent Orders: (1) require payment of a total of $6,000 for investigative costs; (2) deny the franchise broker registration applications for Del Sontro and ZGrowth;”

Officers and directors (individuals, not the company)

Concluded (11)

Consent Order, State of Washington Department of Financial Institutions, Securities Division (Division). In the matter of determining whether there has been a violation of the Franchise Investment Protection Act by Albert V. Mendoza, Respondent.
concluded
Government or regulatory action · Albert V. Mendoza (Executive Vice President of ZGrowth Partners, LLC, which assists the franchisor with sales; not listed in Item 2) · filed 2023-09-29 · State of Washington Department of Financial Institutions, Securities Division · S-23-3612-23-CO03
“… Order Number: S-23-3612-23-CO03, September 29, 2023.”Page 13 of the 2025 FDD, Item 3
Outcome: “The Consent Orders: (1) require payment of a total of $6,000 for investigative costs; (2) deny the franchise broker registration applications for Del Sontro and ZGrowth;”
Consent Order, State of Washington Department of Financial Institutions, Securities Division (Division). In the matter of determining whether there has been a violation of the Franchise Investment Protection Act by ZGrowth Partners, LLC and Rick Del Sontro, Respondents.
concluded
Government or regulatory action · Rick Del Sontro (our CEO) and ZGrowth Partners, LLC (affiliate of our parent ZGrowth Acquisitions 5, LLC) · filed 2023-09-29 · State of Washington Department of Financial Institutions, Securities Division · S-23-3612-23-CO01
“… Order Number: S-23-3612-23-CO01, September 29, 2023;”Page 13 of the 2025 FDD, Item 3
Outcome: “The Consent Orders: (1) require payment of a total of $6,000 for investigative costs; (2) deny the franchise broker registration applications for Del Sontro and ZGrowth;”
David Thurston, Rosemarie Thurston and Tilden Greater Atlanta, LLC n/k/a Tilden Storage and Moving LLC v. Zippy Shell Incorporated et. al.
settled
Brought by a franchisee · Rick Del Sontro (our CEO), a named defendant with Zippy Shell Incorporated et al. · filed 2022-06-01 · American Arbitration Association (Washington, DC) · 01-22-0002-3087
“… Case No: 01-22-0002-3087 (Washington, DC)”Page 11 of the 2025 FDD, Item 3
Outcome: “David Thurston, Rosemarie Thurston and Tilden Greater Atlanta, LLC n/k/a Tilden Storage and Moving LLC: $1,325,000;” (page 12)
Scott Sheffield and Bryma, Inc. v. Zippy Shell Incorporated et. al.
settled
Brought by a franchisee · Rick Del Sontro (our CEO), a named defendant with Zippy Shell Incorporated et al. · filed 2022-06-01 · American Arbitration Association (Washington, DC) · 01-22-0002-3073
“… Case No: 01-22-0002-3073 (Washington, DC)”Page 11 of the 2025 FDD, Item 3
Outcome: “Scott Sheffield and Bryma, Inc.: $1,050,000;” (page 12)
Stephen Feil and Maroon Spider, LLC v. Zippy Shell Incorporated et. al.
settled
Brought by a franchisee · Rick Del Sontro (our CEO), a named defendant with Zippy Shell Incorporated et al. · filed 2022-06-01 · American Arbitration Association (Washington, DC) · 01-22-0002-3071
“… Case No: 01-22-0002-3071 (Washington, DC)”Page 11 of the 2025 FDD, Item 3
Outcome: “Stephen Feil and Maroon Spider, LLC: $1,050,000;” (page 12)
Thomas Elrod, Maureen Elrod and Sunrise Ventures TBAE, LLC v. Zippy Shell Incorporated et. al.
settled
Brought by a franchisee · Rick Del Sontro (our CEO), a named defendant with Zippy Shell Incorporated et al. · filed 2022-06-01 · American Arbitration Association (Washington, DC) · 01-22-0002-3082
“… Case No: 01-22-0002-3082 (Washington, DC).”Page 11 of the 2025 FDD, Item 3
Outcome: “Thomas Elrod, Maureen Elrod and Sunrise Ventures TBAE, LLC: $1,350,000.” (page 12)
Brian Poggi v. Zippy Shell Incorporated et. al.
settled
Brought by a franchisee · Rick Del Sontro (our CEO), a named defendant with Zippy Shell Incorporated et al.; the award runs against him personally · filed 2020-03-05 · American Arbitration Association (Washington, DC) · 01-20- 0001-7060
“… Case No: 01-20- 0001-7060 (Washington, DC)”Page 11 of the 2025 FDD, Item 3
Outcome: “Poggi and against Zippy Shell, Gareth Taylor and Rick Del Sontro, jointly and severally, in the sum of $1,464,048.” (page 13)
Del Basso and Tampa Bay Storage and Moving, LLC v. Zippy Shell Incorporated et. al.
settled
Brought by a franchisee · Rick Del Sontro (our CEO), a named defendant with Zippy Shell Incorporated et al. · filed 2020-03-05 · American Arbitration Association (Washington, DC) · 01-20-0000-4022
“… Case No: 01-20-0000-4022 (Washington, DC)”Page 11 of the 2025 FDD, Item 3
Outcome: “Del Basso and Tampa Bay Storage and Moving, LLC: $1,100,000;” (page 12)
Pearson and Tensaw Investment Group, LLC v. Zippy Shell Incorporated et. al.
settled
Brought by a franchisee · Rick Del Sontro (our CEO), a named defendant with Zippy Shell Incorporated et al. · filed 2020-03-05 · American Arbitration Association (Washington, DC) · 01-20-0000-5245
“… Case No: 01-20-0000-5245 (Washington, DC)”Page 11 of the 2025 FDD, Item 3
Outcome: “Pearson and Tensaw Investment Group, LLC: $7,375,000;” (page 12)
Sean Avery, Erin Avery and Avery Row Portable Moving & Storage LP v. Zippy Shell Incorporated et. al.
settled
Brought by a franchisee · Rick Del Sontro (our CEO), a named defendant with Zippy Shell Incorporated et al. · filed 2020 · American Arbitration Association (Washington, DC) · 01-20-0005-4487
“… Case No: 01-20-0005-4487 (Washington, DC)”Page 11 of the 2025 FDD, Item 3
Outcome: “Sean Avery, Erin Avery and Avery Row Portable Moving & Storage LP: $1,900,000;” (page 12)
United States of America Vs. Rainy Day Holdings, LLC et. al.
settled
Government or regulatory action · Rick Del Sontro (our CEO; CEO of ZGrowth Partners, LLC) and his former charity The Rainy Day Foundation, Inc. · filed 2015-09-28 · E.D.N.Y · 15-5576
“… Case No. 15-5576 (E.D.N.Y) On September 28, 2015, the United States Attorneys’ Office for the Eastern District of New York filed a civil action against 20 defendants arising out of the residential mortgage crisis (2008-2010)”Page 11 of the 2025 FDD, Item 3
Outcome: “On February 19, 2018, the parties entered into a Consent Decree and Order of Settlement (the “Settlement Agreement”). Under the terms of the Settlement Agreement, Rainy Day was required to pay the United States $116,000 and Mr. Del Sontro was required to pay the United States $150,000.”

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

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)

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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