FDD Items 3 & 4 · 2025 filing
Tropical Smoothie Cafe litigation history
What Tropical Smoothie Cafe 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
- 1
- Item 3, as counted in the filing
- Largest disclosed settlement
- $63K
- As stated in Item 3
- Bankruptcy (Item 4)
- Disclosed
- Franchisor, parent, predecessor or officer
- Filing year
- 2025
- Disclosures cover the prior ten years
Extracted from the 2025 Franchise Disclosure Document
Item 3: litigation
JSG Management Co. v. Tropical Smoothie Café, LLC (Case No. 01-16-0001-4215), American Arbitration Association in Atlanta, Georgia, filed April 18, 2016. Former single-unit franchisee alleged breach of franchise agreement and fraudulent financial performance misrepresentations regarding 2009 breakfast initiative. Franchisor asserted counterclaim for unauthorized early closure and breach of post-termination obligations. Settled November 22, 2016 for $62,500 with no admission of liability by Tropical Smoothie Café, LLC.
Disclosed in the 2025 Franchise Disclosure Document
Item 4: bankruptcy
Bankruptcy Code; B. Obtained a discharge of its debts under the bankruptcy code; or C. Was a principal officer of a company or a general partner in a partnership that either filed as a debtor (or had filed against it) a petition to start an action under the U.S. Bankruptcy Code or that obtained a di
Disclosure signals that moved the score
How this shows up in the verdict
- Clean: no bankruptcy, no going-concern, audited, Item 19 present, +26.5% growth
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?