FDD Items 3 & 4 · 2024 filing
MOD A Sonesta Collection litigation history
What MOD A Sonesta Collection 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
- 19
- Item 3, as counted in the filing
- Largest disclosed settlement
- $500K
- 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
1 pending class action (Special Situations Fund III QP v. Adam Portnoy re TravelCenters merger, Maryland Circuit Court 2023). 18 concluded: 8 RLHC merger stockholder suits (dismissed 2021, $240K settlement); Radisson v. SRLHF/RLHC (settled $500K, 2021); SRLHF v. Polselli (dismissed 2020); Linger Chu v. SRLHF (settled, franchisee paid $250K, 2019); Khan Lawsuits x2 (settled $500K, 2019); Vemulapalli (settled $80K, 2019); Minnesota Hospitality (settled $150K, 2019); Tiya Hospitality/$10.5K (2018); JS Three Star (settled, 2017); SRLHF v. Patel et al. (pending, filed 2023).
Disclosure signals that moved the score
How this shows up in the verdict
- Multiple pending and concluded lawsuits including class action, stockholder disputes, and franchisee contract conflicts suggest systemic corporate governance and franchisor-franchisee relationship problems
- Parent company (Sonesta/RLHC merger entity) disclosed 'going concern' accounting doubt signals potential insolvency or financial distress
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?