FDD Items 3 & 4 · 2026 filing

Signature Inn litigation history

What Signature Inn 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: 22; Item 3, as counted in the filing

Largest settlement, franchisor's own cases: $500K; As stated in Item 3

Bankruptcy (Item 4): Disclosed; Franchisor, parent, predecessor or officer

Filing year: 2026; Disclosures cover the prior ten years

Extracted from the 2026 Franchise Disclosure Document

Item 3: litigation

Mix of concluded merger-related stockholder suits (all dismissed/settled, $240K paid), concluded commercial disputes (Radisson tortious interference $500K settlement; guarantor/franchisee collection suits, several settled $80K-$500K), and 6 pending 2025 suits filed by SRLHF against former franchisees/guarantors to collect unpaid amounts and liquidated damages.

Item 3 (litigation) · 22 matters disclosed

Litigation cases

The franchisor

Concluded (7)

Red Lion Hotels Franchising, Inc. v. Minnesota Hospitality, Inc.
settled
Brought against a franchisee · filed 2019-02-22 · U.S. District Court for the Eastern District of Washington · 2:19-cv-00061
“… Case No. 2:19-cv-00061 (U.S. District Court for the Eastern District of Washington). On February 22, 2019, SRLHF filed a lawsuit against defendant, the guarantor of a former franchisee, for breach of its guarantee as a result of defendant’s failure to ensure the former franchisee’s performance under the franchise license agreement,”Page 20 of the 2026 FDD, Item 3
Outcome: “SRLHF $150,000 and execute a confession of judgment. On October 22, 2019, the court granted the parties’ stipulated motion to dismiss.” (page 21)
Red Lion Hotels Franchising, Inc. v. Remo Polselli
dismissed
Brought against a franchisee · filed 2019-03-14 · U.S. District Court for the Eastern District of Washington · 2:19-cv-00082
“… Case No. 2:19-cv-00082 (U.S. District Court for the Eastern District of Washington). On March 14, 2019, SRLHF filed a lawsuit against defendant, the guarantor of a former franchisee, for breach of its guarantee as a result of defendant's failure to ensure the former franchisee's performance under the franchise license agreement, including”Page 19 of the 2026 FDD, Item 3
Outcome: “On October 9, 2020, the court granted the parties’ stipulated motion and entered an Order of Dismissal without Prejudice, dismissing all of the parties’ claims without prejudice.”
Linger Chu and His-Hsieh Chu v. Jim Tang, Red Lion Hotels Franchising, Inc. and Does 1-100
settled
Brought by a franchisee · filed 2018-06-28 · Superior Court of the State of California, County of Los Angeles · BC712103
“… Case No. BC712103 (Superior Court of the State of California, County of Los Angeles). On June 28, 2018, plaintiffs filed a lawsuit against SRLHF and third parties for intentional misrepresentation, negligent misrepresentation, and declaratory relief resulting from plaintiffs’ sale of their Red Lion-branded”Page 19 of the 2026 FDD, Item 3
Outcome: “On March 28, 2019, the plaintiffs and SRLHF entered into a Settlement and Release Agreement in which the plaintiffs and SRLHF agreed to mutually release one another from all claims and the plaintiffs agreed to pay SRLHF $250,000 and execute a confession of judgment.”
Radisson Hotels International, Inc. v. Red Lion Hotels Corporation d/b/a RLH Corporation, and Red Lion Hotels Franchising, Inc.
settled
filed 2018-09-26 · U.S. District Court for the Eastern District of Washington · 2:18-cv-00303
“… Case No. 2:18-cv-00303 (U.S. District Court for the Eastern District of Washington). On September 26, 2018, plaintiff, which is a competitor of RLHC and SRLHF, filed a lawsuit against RLHC and SRLHF for tortious interference with franchise license agreements and a”Page 19 of the 2026 FDD, Item 3
Outcome: “On August 25, 2021, plaintiff, RLHC and SRLHF entered into a Settlement Agreement and Release in which plaintiff, on the one hand, and RLHC and SRLHF, on the other hand, agreed to mutually release one another from all claims, and, without admitting any liability, RLHC and SRLHF agreed to pay plaintiff $500,000. On September 2, 2021, the court granted the parties’ Stipulated Motion for Dismissal,”
Red Lion Hotels Franchising, Inc. v. Ghazanfar Khan, et al.
settled
Brought against a franchisee · filed 2017-03-13 · U.S. District Court for the Eastern District of Washington · 2:17-cv-00094; 2:17-cv-00155
“… Case No. 2:17-cv-00094, Case No. 2:17-cv-00155 (U.S. District Court for the Eastern District of Washington). On March 13, 2017, SRLHF filed a lawsuit against two former franchisees and their guarantors for trademark infringement, false designation of origin and breach of contract as a result of their failure to comply with their”Page 20 of the 2026 FDD, Item 3
Outcome: “On December 28, 2018, the parties entered into a Confidential Settlement and Mutual Release Agreement in which the parties agreed to mutually release each other from all claims, defendants paid to SRLHF $500,000, and defendants agreed to immediately cease all use of our proprietary service marks and trademarks.”
Red Lion Hotels Franchising, Inc. v. JS Three Star Investment Inc.
settled
Brought against a franchisee · filed 2016 · District Court of the 422nd Judicial District, Kaufman County, Texas · 96777-422
“… Case No. 96777-422 (District Court of the 422nd Judicial District, Kaufman County, Texas). In December 2016, SRLHF filed a lawsuit against a former franchisee for failure to pay its account, unjust enrichment and breach of contract as a result of its failure to pay amounts due under the membership agreement. On March 8, 2017,”Page 21 of the 2026 FDD, Item 3
Outcome: “On December 11, 2017, the parties entered into a confidential settlement agreement in which the parties agreed to mutually release each other from all claims. On January 18, 2018, the court dismissed the case with prejudice.”
Red Lion Hotels Franchising, Inc. v. Kumar and Sadikila Vemulapalli
settled
Brought against a franchisee · filed 2016-05-12 · Superior Court of Washington, County of Spokane · 16-2-01814-3
“… Case No. 16-2- 01814-3 (Superior Court of Washington, County of Spokane). On May 12, 2016, SRLHF filed a complaint against guarantors of a former franchisee seeking to enforce their personal guaranty of a franchise agreement. On December 15, 2017, defendants filed an answer, affirmative defenses and counterclaims for breach of”Page 20 of the 2026 FDD, Item 3
Outcome: “On December 18, 2018, the parties entered into a Settlement and Release Agreement in which the parties agreed to mutually release each other from all claims and defendants agreed to pay SRLHF $80,000. On June 13, 2019, the court dismissed all claims with prejudice.”

Status not stated in the filing (6)

Sonesta RL Hotels Franchising Inc. v. Bliss Investment LLC and Dr. Chandrakant Shah
Brought against a franchisee · filed 2025-01-15 · United States District Court for the District of Massachusetts · 1:25-cv-10112-PGL
“Suits Against Former Franchisees/Guarantors to Collect Unpaid Amounts and Liquidated Damages: Sonesta RL Hotels Franchising Inc. v. Bliss Investment LLC and Dr. Chandrakant Shah, Civil Action No. 1:25-cv-10112-PGL, Filed January 15, 2025 (United States District Court for the District of Massachusetts)”Page 21 of the 2026 FDD, Item 3
Sonesta RL Hotels Franchising Inc. v. Gonzales WS Hospitality LLC and Sal Bhatty
Brought against a franchisee · filed 2025-07-11 · United States District Court for the District of Massachusetts · 1:25-cv-11973-ADB
“… Civil Action No. 1:25-cv-11973-ADB, Filed July 11, 2025 (United States District Court for the District of Massachusetts)”Page 21 of the 2026 FDD, Item 3
Sonesta RL Hotels Franchising Inc. v. Grain Valley Hospitality, LLC and Riteshkumar Patel
Brought against a franchisee · filed 2025-12-31 · United States District Court for the District of Colorado · 1:25-cv-04233
“… Civil Action No. 1:25-cv-04233, Filed December 31, 2025 (United States District Court for the District of Colorado)”Page 21 of the 2026 FDD, Item 3
Sonesta RL Hotels Franchising Inc. v. MSDS MGT, Inc., Mohkam Sing Bath, and Harjinder Sharma
Brought against a franchisee · filed 2025-05-20 · United States District Court for the District of Massachusetts · 1:25-cv-11428
“… Civil Action No. 1:25-cv-11428, Filed May 20, 2025 (United States District Court for the District of Massachusetts)”Page 21 of the 2026 FDD, Item 3
Sonesta RL Hotels Franchising Inc. v. Pardeshi LLC
Brought against a franchisee · filed 2025-10-24 · United States District Court for the District of Massachusetts · 1:25-cv-13137
“… Civil Action No. 1:25-cv-13137, Filed October 24, 2025 (United States District Court for the District of Massachusetts)”Page 21 of the 2026 FDD, Item 3
Sonesta RL Hotels Franchising Inc. v. SIGMM LLC, Mark Gregson, and Peggy Gregson
Brought against a franchisee · filed 2025-04-15 · United States District Court for the District of Massachusetts · 1:25-cv-10954-AK
“… Civil Action No. 1:25-cv-10954-AK, Filed April 15, 2025 (United States District Court for the District of Massachusetts)”Page 21 of the 2026 FDD, Item 3

Parent, affiliates, master franchisor and subfranchisor

Concluded (2)

Van Cleave v. Red Lion Hotels Corporation, et al.
dismissed
Red Lion Hotels Corporation (RLHC) and members of the RLHC board of directors · filed 2021-02-09 · U.S. District Court for the District of Delaware · 1:21-cv-00177
“Eight lawsuits were filed by purported RLHC stockholders in United States District Courts in connection with the merger (the “Merger”) of RLHC with and into a wholly owned subsidiary of Sonesta: Van Cleave v. Red Lion Hotels Corporation, et al., Case No. 1:21-cv-00177, Filed February 9, 2021 (U.S. District Court for the District of Delaware)”Page 18 of the 2026 FDD, Item 3
Outcome: “As of March 31, 2021, the plaintiffs in each of these eight lawsuits voluntarily dismissed their respective claims, and on September 8, 2021, the parties entered into an agreement that provided for a mutual release of claims and for RLHC to pay the plaintiffs’ attorneys an aggregate amount of $240,000 in fees.” (page 19)
Red Lion Hotels Corporation v. Tiya Hospitality, LLC
settled
Brought against a franchisee · Red Lion Hotels Corporation (RLHC) · filed 2017 · Circuit Court of Jefferson County, Alabama · CV-2017-902126.00
“… Case No. CV-2017-902126.00 (Circuit Court of Jefferson County, Alabama). In May 2017, RLHC filed a lawsuit against a former brand member for failure to pay amounts due and breach of contract for failure to pay amounts due. On July 3, 2017, defendant filed an answer and counterclaim, alleging that RLHC breached the membership agreement, and”Page 21 of the 2026 FDD, Item 3
Outcome: “The parties entered into a Confidential Mutual Release and Settlement Agreement on February 19, 2018, under which defendant paid to RLHC $10,500 and the parties agreed to mutually release each other from all claims. On August 9, 2018, the court entered an Order of Dismissal.”

This list shows 15 of the 22 matters Item 3 discloses; the rest are in the filing.

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.

Disclosed in the 2026 Franchise Disclosure Document

Item 4: bankruptcy

In re: Office Properties Income Trust, et al., Bankruptcy Petition 25-90530 (U.S. Bankruptcy Court of Texas, Houston), filed October 30, 2025 - entities for which certain SRLHF officers/directors have management responsibility filed Chapter 11; this is not SRLHF's own bankruptcy

Disclosure signals that moved the score

How this shows up in the verdict

23 litigation matters, 6 pending 2025 suits
Affiliate Chapter 11 bankruptcy disclosed (not franchisor's own)

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?

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