How does the Bojangles's Item 3 franchisor's litigation relate to the franchisor's bankruptcy in Item 4?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 3: LITIGATION]
ITEM 3 LITIGATION
Pending Matters
Bojangles' of America Franchisee Association, Inc. v. Bojangles Opco, LLC, Case No. 24-CVS-3738 (N.C. Super. Ct., Guilford Cty.) (the "Guilford County Case") and Bojangles Restaurants, Inc. and Bojangles Opco, LLC v. Bojangles' of America Franchisee Association, Inc. and Berkowitz Pollack Brant, Case No. 24-CV018004-590 (N.C. Super Ct., Mecklenburg Cty.) (the "Mecklenburg County Case). On March 4, 2024, Bojangles' of America Franchisee Association ("BFA"), which is a franchisee association whose members operate Bojangles restaurants, filed a complaint in the Guilford County Case against us asserting claims for breach of an oral agreement and commission of unfair and deceptive trade practices in violation of NC Gen. Stat. § 75-1.1. The complaint seeks: (i) an order of specific performance compelling us to provide information to the BFA to complete an audit of the Bojangles Marketing Development Fund and an audit of an Accrual Account under a Master Distribution Agreement between our affiliate, Bojangles Restaurants, Inc., and McLane Foodservice, Inc. ("McLane"), a supplier to Bojangles restaurants; (ii) a declaration that the BFA has a right to conduct an annual audit of the Marketing Development Fund and the Accrual Account; and (iii) a determination that our actions with respect to the audit constitute an unfair and deceptive trade practices giving rise to a claim for attorneys' fees. The complaint does not seek any monetary damages from us. We intend to vigorously defend against these claims. On March 15, 2024, we filed a motion to seal the complaint and its exhibits because they disclose confidential and proprietary information about the Bojangles system. The court granted our motion on March 18, 2024 and sealed the complaint and its exhibits and ordered the plaintiffs to file redacted versions. The plaintiffs filed redacted versions without first conferring with us and failed to fully redact our confidential and proprietary information. On April 19, 2024, we submitted a motion to compel the plaintiffs to redact specific portions [Item 3: LITIGATION]
Without admitting any wrongdoing, or that any supplemental disclosure was required to be made, Bojangles', Inc. made certain supplemental disclosures in a Form 8-K that filed with the SEC on December 31, 2018. After the supplemental disclosures were filed, Plaintiff filed an amended complaint that continued to assert disclosure claims related to the proxy and challenge the adequacy of the merger consideration. Plaintiff thereafter obtained discovery relating to whether the disclosed financial projections fully and properly accounted for Bojangles' restaurant portfolio optimization plan announced in July 2018. After reviewing the discovery, Plaintiff agreed to dismiss its claims as moot. Bojangles', Inc. agreed to pay a mootness fee of $75,000 in October 2019 for full satisfaction of any claims by Plaintiff or Plaintiff's counsel for fees, expenses or costs. The matter was thereafter dismissed as moot on October 30, 2019.
Other than these four actions, no litigation is required to be disclosed in this Item.
What This Means (2025 FDD)
Based on the 2025 FDD, Item 3 for Bojangles discusses litigation, while Item 4 would cover any bankruptcy filings. However, the provided excerpts of the FDD do not contain information in Item 4 regarding bankruptcy. Therefore, it's not possible to determine from this documentation if or how the litigation described in Item 3 relates to any bankruptcy proceedings.
Item 3 does detail pending litigation involving Bojangles' of America Franchisee Association, Inc. v. Bojangles Opco, LLC, filed on March 4, 2024, and Bojangles Restaurants, Inc. and Bojangles Opco, LLC v. Bojangles' of America Franchisee Association, Inc. and Berkowitz Pollack Brant, filed on March 15, 2024. The first case involves claims of breach of an oral agreement and unfair trade practices related to audits of the Bojangles Marketing Development Fund and an Accrual Account. The second case appears to be a response to the first. Bojangles intends to defend against these claims.
Also mentioned in Item 3, Bojangles', Inc. made supplemental disclosures in a Form 8-K filed with the SEC on December 31, 2018, which led to the dismissal of disclosure claims after the plaintiff reviewed discovery. Bojangles', Inc. paid a $75,000 mootness fee in October 2019 to resolve the claims. A prospective franchisee should consult Item 4 of the FDD and ask the franchisor directly about any past or pending bankruptcy filings and how they might relate to current litigation or the overall financial health of the company.