FDD Items 3 & 4 · 2025 filing
The Yellow Chilli litigation history
What The Yellow Chilli 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 (litigation) & 4 (bankruptcy) at a glance
What the filing discloses
- Cases disclosed
- 2
- Item 3, as counted in the filing
- Largest settlement, franchisor's own cases
- None stated
- 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
Mormukut Inn Pvt. Ltd. (Franchisee) v. S.K. Restaurants Pvt. Ltd. (Franchisor): Three cases filed in 2015-2016 (Arbitration Case No. 400/2015 at District Court Agra; Arbitration Case No. 99/2015 at High Court Allahabad; Case No. 1101/2016 at Court of CJM Agra) alleging unfair acts in franchise offer/sale. Settled November 14, 2016 with franchise termination, withdrawal of all cases, and Rs. 1,00,00,000 payment to Franchisee. California Department of Business Oversight administrative action (Consent Order ID: 213620, May 7, 2020): Franchisor offered franchises in California via 'Letter of Intent' and 'Interim Franchise Agreement' documents (Feb 2016-Jan 2018) to three entities without proper franchise registration or FDD disclosure in violation of California Corporations Code sections 31110 and 31119. Resolved via Consent Order with $15,000 penalty and requirement to serve updated FDD and rescission offer to affected franchisees; all three declined rescission.
Item 3 (litigation) · 2 matters disclosed
Litigation cases
The franchisor
Concluded (2)
Consent Order ID: 213620
concludedGovernment or regulatory action · filed 2020-05-07 · California Department of Business Oversight · 213620
“… May 7, 2020, Dept. of Business Oversight of the State of California On January 14, 2019, the California Department of Business Oversight (“Department”) initiated an investigation against the Franchisor.”Page 9 of the 2025 FDD, Item 3
Mormukut Inn Pvt. Ltd. v. S.K. Restaurants Pvt. Ltd.
settledBrought by a franchisee · filed 2015 · District Court at Agra; High Court at Allahabad; Court of CJM, Agra · Arbitration Case No. 400/2015; Arbitration Case No. 99/2015; Case No. 1101/2016
“… Arbitration Case No. 400/2015, District Court at Agra; Arbitration Case No. 99/2015, High Court at Allahabad;”Page 9 of the 2025 FDD, Item 3
Outcome: “On November 14, 2016, the parties reached a settlement agreement wherein the Franchise Agreement executed on July 24, 2013 between the parties was formally terminated, Franchisee agreed to withdraw both arbitration cases and the lawsuit, and outstanding claims, demands, taxes, and payments owed to Franchisee’s employees and vendors would be resolved by Franchisee.”
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?