FDD Items 3 & 4 · 2026 filing
Sonic litigation history
What Sonic 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
- 6
- Item 3, as counted in the filing
- Largest settlement, franchisor's own cases
- $5.7M
- 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
Two concluded data breach-related class actions: (1) In re Sonic Corp. Customer Data Security Breach Litigation - settled August 12, 2019 for $4,325,000 paid by cyber liability insurance; (2) Alcoa Community Federal Credit Union v. Sonic Corp. et al. - consolidated financial institution class action filed October 16, 2018 regarding September 26, 2017 data breach incident. No pending litigation disclosed.
Item 3 (litigation) · 6 matters disclosed
Litigation cases
The franchisor
Concluded (2)
Alcoa Community Federal Credit Union v. Sonic Corp., Sonic Industries Services Inc., Sonic Capital LLC, Sonic Franchising LLC, Sonic Industries LLC, Sonic Restaurants, Inc.
settledfiled 2018-10-16 · U.S. District Court for the Northern District of Ohio (filed in the Eastern District of Arkansas) · 1:19-sb-55000 (Previous Case No. 4:18-cv-00770-BSM)
“plaintiffs filed a consolidated financial institution class action arising out of the data breach incident made public on September 26, 2017. The plaintiffs alleged they suffered property damage and financial losses because we implemented inadequate measures to protect financial institutions’ payment card data from being stolen.”Page 26 of the 2026 FDD, Item 3
Outcome: “On April 25, 2022, the parties entered into a Settlement Agreement and Release whereby defendants agreed to pay up to $5,730,000 to cover eligible class member claims, attorneys’ fees, and costs of administration in exchange for a release of claims against defendants.”
In re Sonic Corp. Customer Data Security Breach Litigation
settledfiled 2017-12-12 · United States District Court for the Northern District of Ohio, Eastern Division of Cleveland · MDL Case Nos. 1:17-sb-55000-JSG through 1:17-sb-55008-JSG
“… (United States District Court for the Northern District of Ohio, Eastern Division of Cleveland, MDL Case Nos. 1:17-sb-55000-JSG through 1:17-sb-55008-JSG). On December 12, 2017, plaintiffs filed a consumer class action asserting various claims related to our alleged failure to safeguard customer payment card information.”Page 26 of the 2026 FDD, Item 3
Outcome: “In part, the settlement provided that, in exchange for a release of claims against defendants, franchisees and relevant vendors, defendants had to pay a total of $4,325,000 into a settlement fund to cover eligible class member claims, attorneys’ fees and costs of administration.”
Parent, affiliates, master franchisor and subfranchisor
Concluded (4)
New York v. Dunkin’ Brands, Inc.
concludedGovernment or regulatory action · Dunkin’ Brands, Inc. (“DBI”) · filed 2019-09-26 · N.Y. Supreme Court for New York County · 451787/2019
“… (N.Y. Supreme Court for New York County, Case No. 451787/2019, filed September 26, 2019). In this matter, the N.Y. Attorney General (“NYAG”) filed”Page 27 of the 2026 FDD, Item 3
Outcome: “Under the consent order, DBI agreed to pay $650,000 in penalties and costs, issue certain notices and other types of communications to New York customers, and maintain a comprehensive information security program through September 2026, including precautions and response measures for credential-stuffing attacks.” (page 28)
The People of the State of California v. Arby’s Restaurant Group, Inc.
settledGovernment or regulatory action · Arby’s Restaurant Group, Inc. (“ARG”) · filed 2019-03-19 · California Superior Court, Los Angeles County · 19STCV09397
“The Attorneys General in these states sought information from ARG on its use of franchise agreement provisions prohibiting the franchisor and franchisees from soliciting or employing each other’s employees. The states alleged that the use of these provisions violated the states’ antitrust, unfair competition, unfair or deceptive acts or practices, consumer protection and other state laws.”Page 27 of the 2026 FDD, Item 3
The People of the State of California v. Dunkin’ Brands, Inc.
settledGovernment or regulatory action · Dunkin’ Brands, Inc. (“DBI”) · filed 2019-03-19 · California Superior Court, Los Angeles County · 19STCV09597
“… (California Superior Court, Los Angeles County, Case No. 19STCV09597, filed on March 19, 2019.) On March 14, 2019, our affiliate, Dunkin Brands, Inc. (“DBI”), entered into a settlement agreement with the Attorneys General of 13 states and jurisdictions concerning the inclusion of “no-poaching” provisions”Page 27 of the 2026 FDD, Item 3
In the Matter of Jimmy John’s Franchisor SPV LLC
concludedGovernment or regulatory action · Jimmy John’s Franchisor SPV, LLC (“JJF”) · Securities Commissioner of Maryland · 2025-0122
“… (Securities Commissioner of Maryland, Case No. 2025-0122). On March 28, 2022, JJF filed a Franchise Disclosure Document (FDD) with the Maryland Securities Division as part of a notice of exemption from franchise registration. In this filing, JJF listed the former franchisees but omitted the required contact information”Page 28 of the 2026 FDD, Item 3
Outcome: “Under the terms of the Consent Order, JJF agreed to pay a $30,000 civil monetary penalty, to permanently cease and desist from the offer or sale of franchises in violation of the Maryland Franchise Law, and to disclose the existence of the Consent Order in future franchise disclosure documents.”
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.
Disclosure signals that moved the score
How this shows up in the verdict
- data-breach settlement paid by cyber insurance
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?