As of the date of this Disclosure Document, how many securities-related lawsuits are pending that name XFI (Bft's franchisor) and certain of its current and former officers, directors, shareholders, and securities underwriters?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
XFI and certain of its current and former officers, directors, shareholders, and securities underwriters have been named in four securities-related lawsuits that are pending as of the date of this Disclosure Document. Two of those lawsuits (namely, Taylor General Lawsuit and the WBP Pension Fund Lawsuit, each as defined below) were consolidated on October 3, 2024, with the Taylor General Lawsuit as the lead lawsuit. In the consolidated complaint filed in the Taylor General Lawsuit on July 26, 2024, the plaintiffs, who purport to be shareholders of XFI, allege that certain defendants made certain omissions and misstatements of material facts in certain of XFI's publicly disclosed and filed documents between July 23, 2021 and May 10, 2024 ("Class Period") and violated certain provisions of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and the Securities Act of 1933 (the "SEC Claims"), and seek (i) to represent themselves and other shareholders of XFI who held shares during the designated Class Period in a putative class action, and (ii) damages. Defendants filed a motion to dismiss the consolidated complaint on October 8, 2024. On December 6, 2024, the plaintiffs filed an opposition to defendants' motion to dismiss and sought leave to file a proposed supplemental consolidated complaint. On February 18, 2025, the Court granted the plaintiffs' motion to supplement, denying defendants' pending motion to dismiss as moot. On February 28, 2025, plaintiffs filed the supplemented complaint. Defendants' motion to dismiss
the supplemented complaint is due April 15, 2025, and the Court has scheduled a motion to dismiss hearing for August 5, 2025. Any future federal securities lawsuits filed by XFI shareholders asserting SEC claims based on the same or similar facts as Taylor General Lawsuit and/or the WBP Pension Fund Lawsuit would likely be consolidated with the current actions.
Additionally, the Ayers Lawsuit and Akande Lawsuit were consolidated (the "Consolidated Shareholder Derivative Action") on June 24, 2024, and the Consolidated Shareholder Derivative Action is stayed pending final resolution of the consolidated Taylor General Lawsuit and WBP Pension Fund Lawsuit. It is possible that additional shareholder derivative lawsuits will be filed purportedly on behalf of XFI based on the same set of facts alleged in the Ayers Lawsuit and Akande Lawsuit.
Source: Item 3 — LITIGATION (FDD pages 14–18)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, there are four pending securities-related lawsuits naming XFI (Bft's franchisor) and certain of its current and former officers, directors, shareholders, and securities underwriters as of the date of the disclosure document. Two of these lawsuits, the Taylor General Lawsuit and the WBP Pension Fund Lawsuit, were consolidated on October 3, 2024, with the Taylor General Lawsuit taking the lead. The consolidated complaint alleges omissions and misstatements of material facts in XFI's publicly disclosed documents between July 23, 2021, and May 10, 2024, violating the Securities Exchange Act of 1934 and the Securities Act of 1933. The plaintiffs are seeking to represent shareholders who held shares during this period and are claiming damages. As of the FDD date, a motion to dismiss the supplemented complaint is due April 15, 2025, and a hearing is scheduled for August 5, 2025.
Additionally, the Ayers Lawsuit and Akande Lawsuit were consolidated on June 24, 2024, and are stayed pending the resolution of the Taylor General Lawsuit and WBP Pension Fund Lawsuit. These lawsuits are shareholder derivative actions, meaning they are filed on behalf of the company against its officers and directors. It is possible that more shareholder derivative lawsuits could be filed based on the same facts as the Ayers and Akande Lawsuits.
For a prospective Bft franchisee, the existence of these lawsuits indicates potential financial and legal risks associated with the parent company, XFI. While the lawsuits are still pending and the outcomes are uncertain, they could have a material impact on XFI's financial stability and reputation, which could indirectly affect Bft franchisees. It is important for potential franchisees to closely monitor the developments of these lawsuits and assess the potential risks before investing in a Bft franchise.