FDD Items 3 & 4 · 2025 filing

Stratus Building Solutions / Stratus Clean litigation history

What Stratus Building Solutions / Stratus Clean disclosed about lawsuits, arbitrations and bankruptcy in the 2025 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: 3; Item 3, as counted in the filing

Largest disclosed settlement: $15K; As stated in Item 3

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

Filing year: 2025; Disclosures cover the prior ten years

Extracted from the 2025 Franchise Disclosure Document

Item 3: litigation

Two pending PAGA wage-misclassification actions against SBS Franchising by existing unit franchisees in California (Vergara 2025, Solorio 2024, the latter on appeal after motion to compel arbitration denied); two historical actions against the predecessor entity Stratus Franchising, LLC (Virginia SCC settlement 2011, CA Dept. of Business Oversight order 2015) that did not involve current ownership.

Item 3 · 3 matters disclosed · 1 pending listed

Litigation cases

Parent, affiliates and predecessor

Pending (1)

Zamarria Solorio, et al. vs. SBS Franchising LLC, et al
pending
Brought by a franchisee · SBS Franchising LLC, et al. · filed 2024-06-28 · Superior Court of California, San Diego County · 37-2024-00029829-CU-OE-CTL
“Zamarria Solorio, et al. vs. SBS Franchising LLC, et al, Case No. 37-2024-00029829-CU-OE- CTL, pending in the Superior Court of California, San Diego County (June 28, 2024). On June 28, 2024, plaintiffs Alma Rossio Zamarripa Solorio and Melissa Viviana Covarrubias, existing franchisees of SBS Services Group LLC”Page 16 of the 2025 FDD, Item 3

Concluded (2)

In re: Stratus Franchising, LLC, Peter Frese, and Dennis Jarrett
concluded
Government or regulatory action · Stratus Franchising, LLC (predecessor of affiliate SBS Franchising), Peter Frese, and Dennis Jarrett · filed 2015-09-15 · California Department of Business Oversight · Org. ID: 84407
“In re: Stratus Franchising, LLC, Peter Frese, and Dennis Jarrett, California Department of Business Oversight, Org. ID: 84407 (September 15, 2015). In September of 2019, SBS Franchising first learned that a 2015 injunctive order had been issued against its predecessor, Stratus Franchising, LLC”Page 16 of the 2025 FDD, Item 3
Commonwealth of Virginia, ex rel., State Corporation Commission v. Pete Frese, Jr. and Stratus Franchising, LLC
settled
Government or regulatory action · Stratus Franchising, LLC (predecessor of affiliate SBS Franchising) and Pete Frese, Jr. · filed 2011 · Commonwealth of Virginia, State Corporation Commission · SEC-2011-00008
“Case No. SEC-2011-00008 (2011). The Commission alleged that Stratus Franchising, LLC (the predecessor to our affiliate, SBS Franchising, in the ownership and operation of the Stratus Building Solutions franchise system) and Pete Frese, Jr., principal and officer of Stratus Franchising, LLC, violated §13.1-563 (2) of the Virginia Retail Franchising Act”Page 16 of the 2025 FDD, Item 3
Outcome:“On June 16, 2011, the defendants agreed to a Settlement Order under which they neither admitted nor denied the allegations but agreed to pay to the Treasurer of the Commonwealth of Virginia $15,000 in monetary penalties and $5,000 in costs, and agreed not to violate the Virginia Retail Franchise Act in the future.”

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

4 litigation matters incl. 2 pending PAGA wage/misclassification suits in CA

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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