FDD Items 3 & 4 · 2026 filing
Purosystems litigation history
What Purosystems 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 (litigation) & 4 (bankruptcy) at a glance
What the filing discloses
- Cases disclosed
- 4
- Item 3, as counted in the filing
- Largest settlement, franchisor's own cases
- $33K
- 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: Born Active, LLC v. PuroSystems (franchisee suit alleging breach of contract, fraud, CA franchise law violations, filed Feb 2026, unresolved). Prior: PuroSystems v. DePaoli (AAA arbitration, unpaid royalties, settled 2022 for $32,702.50). Other Item 3 actions during last fiscal year: PuroSystems v. Katz (AAA, unpaid royalties $62,981.56, settled Oct 2025) and PuroSystems v. Schatz/SB Enterprises (AAA, unpaid royalties $608,935.38, counterclaim for wrongful termination, in discovery).
Item 3 (litigation) · 4 matters disclosed · 2 pending listed
Litigation cases
The franchisor
Pending (2)
Born Active, LLC vs. PuroSystems, LLC et al
pendingBrought by a franchisee · filed 2026-02-23 · Superior Court of the State of California, County of Los Angeles · 26STCV05850
“… Case No. 26STCV05850, Superior Court of the State of California, County of Los Angeles, filed February 23, 2026.”Page 14 of the 2026 FDD, Item 3
PuroSystems, LLC v. Christopher Schatz and SB Enterprises, Ltd.
pendingBrought against a franchisee · filed 2025 · American Arbitration Association · 01-25-0005-1298
“… American Arbitration Association Case No. 01-25-0005-1298 PuroSystems, LLC filed a Demand for Arbitration in October 2025 seeking payment of $608,935.38 in outstanding royalties and related amounts alleged to be due under the applicable Franchise Agreements.”Page 14 of the 2026 FDD, Item 3
Outcome: “The matter is in discovery and remains pending before the American Arbitration Association. Other than the 4 actions listed above, no litigation is required to be disclosed in this Item.” (page 15)
Concluded (2)
PuroSystems, LLC v. Larry and Karen Katz, et al.
settledBrought against a franchisee · filed 2025 · American Arbitration Association · 01-25-0003-2937
“… American Arbitration Association Case No. 01- 25-0003-2937 In July 2025, PuroSystems, LLC filed a Demand for Arbitration seeking recovery of $62,981.56 in unpaid royalties and related amounts due under the Franchise Agreement.”Page 14 of the 2026 FDD, Item 3
Outcome: “The matter was resolved through a settlement agreement on October 15, 2025. PuroSystems, LLC v. Christopher Schatz and SB Enterprises, Ltd., American Arbitration Association Case No. 01-25-0005-1298 PuroSystems, LLC filed a Demand for Arbitration in October 2025 seeking payment of $608,935.38 in outstanding royalties and related amounts alleged to be due under the applicable Franchise Agreements.”
PuroSystems, LLC v. David DePaoli
settledBrought against a franchisee · filed 2019-08-01 · American Arbitration Association · 01-19-0002-3841
“… Case Number: 01-19-0002-3841, American Arbitration Association (Filed August 1, 2019).”Page 14 of the 2026 FDD, Item 3
Outcome: “The parties entered into a settlement agreement covering all claims on June 3, 2022, under which DePaoli agreed to pay us the total sum of $32,702.50.”
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?