FDD Items 3 & 4 · 2026 filing
Matco Tools litigation history
What Matco Tools 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 & 4 at a glance
What the filing discloses
- Cases disclosed
- 29
- Item 3, as counted in the filing
- Largest disclosed settlement
- $13.5M
- As stated in Item 3
- 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
Pending actions include a data security class action (Faduie et al.), financing-related case (Jim's Speed Shop), and multiple Matco collection arbitrations against former distributors. Concluded actions include a large California class action settlement (Fleming, paid $13.46M), and various other distributor disputes. One Consent Order from California DFPI (May 2025, $5,000 penalty for franchise disclosure errors).
Disclosure signals that moved the score
How this shows up in the verdict
- Multiple litigation exposures including data breach class action, collection actions against distributors, and independent contractor misclassification claims — indicates operational and legal instability
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?