What constitutes 'routine litigation incidental to the business' that Better Blend considers an exception to required disclosure?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
- The following is added at the end of Item 3:
Except as provided above, with regard to the franchisor, its predecessor, a person identified in Item 2, or an affiliate offering franchises under the franchisor's principal trademark:
- B. No such party has pending actions, other than routine litigation incidental to the business, which are significant in the context of the number of franchisees and the size, nature or financial condition of the franchise system or its business operations.
Source: Item 23 — RECEIPTS (FDD pages 43–157)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, the company is not required to disclose pending actions against it if they qualify as 'routine litigation incidental to the business.' This exception applies if the litigation is not significant when considering the number of franchisees, the size and nature of the franchise system, or its financial condition and business operations.
In practical terms, this means that Better Blend does not have to report every single lawsuit or legal claim. Minor or common legal issues that arise regularly in the course of business, such as small customer disputes or minor contract disagreements, might fall under this exception. However, the FDD does not provide specific examples of what Better Blend considers 'routine litigation'.
For a prospective franchisee, it's important to understand the types of legal issues that could be considered routine for a smoothie and nutrition business. It would be prudent to ask Better Blend for examples of litigation they consider routine and incidental, to get a clearer picture of the types of legal challenges a franchisee might face and whether the franchisor has a history of more significant legal problems. Understanding this distinction can help a franchisee assess the potential risks associated with the franchise and the level of legal support they might need.