FDD Items 3 & 4 · 2024 filing
MainStay Suites litigation history
What MainStay Suites disclosed about lawsuits, arbitrations and bankruptcy in the 2024 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
- $403.0M
- As stated in Item 3
- Bankruptcy (Item 4)
- None
- Franchisor, parent, predecessor or officer
- Filing year
- 2024
- Disclosures cover the prior ten years
Extracted from the 2024 Franchise Disclosure Document
Item 3: litigation
Section I discloses 3 pending matters: (1) Norma Knuth v. Radisson (Saskatchewan class action re undisclosed destination marketing fees, $403M demand); (2) Jai Sai Baba LLC v. Choice (E.D. Pa.; ~90 franchisees alleging RICO/Sherman Act/Civil Rights/state franchise law violations, stayed pending individual arbitration); (3) T&T Management v. Choice (M.D. Fla.; breach/data misappropriation re a Country Inn hotel). Section II lists many franchisor-initiated AAA arbitrations and court actions to recover royalties and liquidated damages.
Disclosure signals that moved the score
How this shows up in the verdict
- Aggressive litigation pattern: 71 royalty recovery actions in one fiscal year suggests systemic collection issues or franchisee financial distress
- Significant post-termination IP enforcement actions (12 cases) indicate compliance/brand protection problems among departed franchisees
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?