Does Crave consider routine litigation incidental to the business as a disclosable pending action?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
- The following is added at the end of Item 3:
Except as provided above, regarding the franchisor, its predecessor, a person identified in Item 2, or an affiliate offering franchises under the franchisor's principal trademark:
- A. No such party has an administrative, criminal, or civil action pending against that person alleging: a felony, a violation of a franchise, antitrust, or securities law, fraud, embezzlement, fraudulent conversion, misappropriation of property, unfair or deceptive practices, or comparable civil or misdemeanor allegations.
- 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.
- C. No such party has been convicted of a felony or pleaded nolo contendere to a felony charge or, within the 10-year period immediately preceding the application for registration, has been convicted of or pleaded nolo contendere to a misdemeanor charge or has been the subject of a civil action alleging: violation of a franchise, antifraud, or securities law; fraud; embezzlement; fraudulent conversion or misappropriation of property; or unfair or deceptive practices or comparable allegations.
- D. No such party is subject to a currently effective injunctive or restrictive order or decree relating to the franchise, or under a Federal, State, or Canadian franchise, securities, antitrust, trade regulation or trade practice law, resulting from a concluded or pending action or proceeding brought by a public agency; or is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities and Exchange Act of 1934, suspending or expelling such person from membership in such association or exchange; or is subject to a currently effective injunctive or restrictive order relating to any other business activity as a result of an action brought by a public agency or department, including, without limitation, actions affecting a license as a real estate broker or sales agent.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, routine litigation incidental to the business is not necessarily considered a disclosable pending action. Specifically, Item 3 clarifies the types of legal actions that Crave must disclose.
Crave is not required to disclose pending actions against the franchisor, its predecessors, individuals identified in Item 2, or affiliates offering franchises under Crave's principal trademark if they are considered "routine litigation incidental to the business." However, this exception applies only if these actions are not significant when considering the number of franchisees, the size, nature, or financial condition of the franchise system or its business operations.
This means that while minor, everyday lawsuits (like slip-and-fall cases) might not be disclosed, more substantial legal issues that could impact the franchise system's stability or a franchisee's business would need to be disclosed. A prospective franchisee should consider the nature and potential impact of any disclosed litigation when evaluating the Crave franchise opportunity.