FDD Items 3 & 4 · 2024 filing

Zoomin Groomin® litigation history

What Zoomin Groomin® disclosed about lawsuits, arbitrations and bankruptcy in the 2024 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: 10; 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: 2024; Disclosures cover the prior ten years

Extracted from the 2024 Franchise Disclosure Document

Item 3: litigation

Multiple pending civil suits and an arbitration against CEO John T. Hewitt and affiliates (fraud, breach of fiduciary duty, breach of contract) arising from unrelated ATAX/Ledgers ventures; a concluded 2021 federal trademark/tortious-interference suit settled for $545,000; a California DFPI consent order requiring Hewitt to disclose a prior federal consent order in future FDDs; and a DOJ action against unrelated Liberty Tax Service naming Hewitt's prior employer.

Item 3 (litigation) · 10 matters disclosed

Litigation cases

Officers and directors (individuals, not the company)

Concluded (9)

JTH Tax LLC d/b/a Liberty Tax Service v. John T. Hewitt, Loyalty LLC, ATAX LLC, ATAX Franchise, Inc. and Yneva Marte
settled
John T. Hewitt (CEO and Chairman of Loyalty, LLC) · filed 2021-02-04 · United States District Court for the Eastern District of Virginia · 2:21-cv-00076-RBS-LRL
“… (Case No.2:21-cv-00076-RBS-LRL) filed February 4, 2021”Page 10 of the 2024 FDD, Item 3
Outcome: “The matter was settled on December 31, 2021. Under the Settlement Agreement, Defendants agreed to pay the Plaintiff $545,000 over 6 years”
United States of America v. Franchise Group Intermediate L 1, LLC d/b/a Liberty Tax Service
concluded
Government or regulatory action · John T. Hewitt (CEO and Chairman of Loyalty, LLC) · filed 2019-12-03 · United States District Court for the Eastern District of Virginia · 2:19-cv-00653-RAJ-DEM
“… (Case No. 2:19-cv-00653-RAJ-DEM) filed on or around December 3, 2019”Page 15 of the 2024 FDD, Item 3
Outcome: “On December 20, 2019, the court granted the joint motion and the motion to seal, which fully resolved the legal proceedings initiated by the DOJ.”
Bablu Shahabuddin v. JTH Tax, Inc., Siempre Tax, and John Hewitt
settled
Brought by a franchisee · John T. Hewitt (CEO and Chairman of Loyalty, LLC) · filed 2018-01-11 · United States District Court for the Eastern District of Virginia · 2:18-cv-00016-MDS-DEM
“… (Case No. 2:18-cv-00016- MDS-DEM) filed on January 11, 2018”Page 14 of the 2024 FDD, Item 3
Outcome: “The parties reached a settlement of all claims whereby JTH Tax paid $775,000”
RSL Senior Partners, LLC, derivatively and on behalf of Liberty Tax, Inc. v Brunot et al
settled
Brought by a third party · John T. Hewitt (CEO and Chairman of Loyalty, LLC) · filed 2018-03-07 · United States District Court for the Eastern District of Virginia · 2:18-cv-00127-HCM-DEM
“… (Case No. 2:18-cv-00127-HCM-DEM), filed on March 7, 2018”Page 13 of the 2024 FDD, Item 3
Outcome: “On September 11, 2019, the Court conducted a hearing for approval of the settlement and for attorney” (page 14)
In Re: Liberty Tax, Inc. Stockholder Litigation (Asbestos Workers Philadelphia Pension Fund v. Hewitt and Erie County Employees Retirement System v. Hewitt, consolidated)
settled
Brought by a third party · John T. Hewitt (CEO and Chairman of Loyalty, LLC) · filed 2017-12-12 · Court of Chancery of the State of Delaware · 2017-0883
“On December 27, 2017, the two above referenced shareholder matters were consolidated with the caption In Re: Liberty Tax, Inc. Stockholder Litigation”Page 13 of the 2024 FDD, Item 3
Outcome: “On June 28, 2019, the Court of Chancery approved a Derivative and Class Action Settlement.”
In Re: Liberty Tax, Inc., Securities Litigation (Mauro v. Liberty Tax, Inc. and Beland v. Liberty Tax, Inc., consolidated)
dismissed
Brought by a third party · John T. Hewitt (CEO and Chairman of Loyalty, LLC) · filed 2017-12-15 · United States District Court for the Eastern District of New York · 17 CV 7327
“The two above referenced shareholder actions were consolidated under the caption In Re: Liberty Tax, Inc., Securities Litigation”Page 11 of the 2024 FDD, Item 3
Outcome: “On January 16, 2020, the case was dismissed for failure to state a claim.”
K&A Publicidad, Inc. v. JTH Tax, Inc., d/b/a Liberty Tax Service, Liberty Tax, Inc. d/b/a Siempre Tax and John Hewitt
settled
Brought by a third party · John T. Hewitt (CEO and Chairman of Loyalty, LLC) · filed 2017-09-05 · Virginia Beach Circuit Court · CL17-4169
“… (Case No. CL17-4169), filed on September 5, 2017”Page 12 of the 2024 FDD, Item 3
Outcome: “This matter, along with the Kirke Franz Szawronski matter described below, settled on January 26, 2019”
Kirke Franz Szawronski v. JTH Tax, Inc., d/b/a Liberty Tax Service, Liberty Tax, Inc., d/b/a Siempre Tax and John Hewitt
settled
Brought by a third party · John T. Hewitt (CEO and Chairman of Loyalty, LLC) · filed 2017-09-05 · Virginia Beach Circuit Court · CL17-4170
“… (Case No. CL17-4170), filed on September 5, 2017”Page 12 of the 2024 FDD, Item 3
Outcome: “This matter, along with the KK&A Publicidad, Inc. matter described above, settled on January 26, 2019”
Kenneth Martin et al. v JTH Tax, Inc. d/b/a Liberty Tax Service, John Hewitt and Danny Hewitt
settled
Brought by a third party · John T. Hewitt (CEO and Chairman of Loyalty, LLC) · filed 2010-11-22 · U.S. District Court for the District of South Carolina · 9:10-3016-CWH
“… (Case No. 9:10-3016-CWH) filed on November 22, 2010”Page 11 of the 2024 FDD, Item 3
Outcome: “In June 2013, the plaintiffs and Liberty settled all remaining matters in controversy with Liberty agreeing to pay the plaintiffs $300,000.” (page 12)

Status not stated in the filing (1)

In the Matter of a Consent Order between The Commissioner of Financial Protection and Innovation and John T. Hewitt
Government or regulatory action · John T. Hewitt (CEO and Chairman of Loyalty, LLC) · Commissioner of Financial Protection and Innovation, State of California
“In the Matter of a Consent Order between The Commissioner of Financial Protection and Innovation and John T. Hewitt”Page 14 of the 2024 FDD, Item 3

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

Thin net worth $39,797, no bankruptcy/going-concern

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?

Back to the Zoomin Groomin® verdict Risk analysis on the brand page Franchisee contacts for due-diligence calls