FDD Items 3 & 4 · 2023 filing

MRI Network litigation history

What MRI Network disclosed about lawsuits, arbitrations and bankruptcy in the 2023 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: 3; Item 3, as counted in the filing

Largest settlement, franchisor's own cases: $300K; As stated in Item 3

Bankruptcy (Item 4): None; Franchisor, parent, predecessor or officer

Filing year: 2023; Disclosures cover the prior ten years

Extracted from the 2023 Franchise Disclosure Document

Item 3: litigation

3 concluded actions by predecessor franchisor Management Recruiters International, Inc.: (1) MRI v. Management Recruiters of Tampa-North (breach of contract, royalty failure; settled $6,500, 2021); (2) MRI v. Rouillard (breach of contract, royalties; settled $75,000 plus new franchise agreement, 2019); (3) Gre-ter Enterprises v. MRI (encroachment, franchise law violations; settled $300,000 to MRI, 2019). All concluded by predecessor.

Item 3 (litigation) · 3 matters disclosed

Litigation cases

The franchisor and its predecessor

Concluded (3)

Management Recruiters International, Inc. v. Management Recruiters of Tampa-North, Inc., Gary A. King, and Kelly King
settled
Brought against a franchisee · Management Recruiters International, Inc. (predecessor franchisor) · filed 2020-07-15 · U.S. District Court, Middle District of Florida, Tampa Division · V 1627-T-33JSS
“… Docket No. V 1627-T-33JSS, filed July 15, 2020 in the United States District Court Middle District of Florida, Tampa Division alleging”Page 12 of the 2023 FDD, Item 3
Outcome: “On May 3, 2021, the remaining Parties, MRI and Kelly A. King and Management Recruiters of Tampa-North, Inc. entered into a settlement wherein the Defendants made payment of $6,500 to MRI and the lawsuit was dismissed on May 6, 2021.”
Gre-ter Enterprises, Inc. v. Management Recruiters International, Inc., et al
settled
Brought by a franchisee · Management Recruiters International, Inc. (predecessor franchisor) · filed 2017-09-07 · Hamilton County, Indiana Superior Court (removed to U.S. District Court for the Southern District of Indiana) · 29D-1709-PL-008320; 1:17-cv- 03554-SEB-DLP
“… Docket No. 29D-1709-PL-008320, filed September 7, 2017 in the Hamilton County, Indiana Superior Court.”Page 13 of the 2023 FDD, Item 3
Outcome: “On March 20, 2019 the parties entered into a written settlement agreement whereby Gre-ter agreed: 1. to make payment of $300,000 to MRI in full settlement of all of MRI’s claims; 2. to consolidate three franchise agreements into one franchise agreement; 3. to eliminate all exclusive territorial”
Management Recruiters International, Inc. v. Peter Rouillard, et al.
settled
Brought against a franchisee · Management Recruiters International, Inc. (predecessor franchisor) · filed 2017-12-26 · Court of Common Pleas, Cuyahoga County, Ohio · CV 17 885383
“… Docket No. CV 17 885383, filed December 26, 2017 in the Court of Common Pleas, Cuyahoga County, Ohio alleging breach of contract for failure to pay royalties and national advertising fund fees.”Page 12 of the 2023 FDD, Item 3
Outcome: “On September 1, 2019, the parties entered into a written settlement agreement whereby Rouillard agreed to make payment to MRI a sum equal to $75,000, execute a new Franchise Agreement for a term of three years, and make supplemental royalty payments to cover costs of being in an exclusive territory of another member.”

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.

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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