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ITEM 3 LITIGATION

Home based Franchise Group, Clozetivity, Frost Shades and Dryer vent Squad (The predecessors), previously had a partner named Thomas Scott, who was sued in court (still ongoing) for misconduct in the business. Mr. Thomas has previously sued the company and its partners Curt Swanson and Leo Goldberger, which he has since withdrawn and has resigned from the company as a partner and voluntarily gave up his partnership in the companies as well. Mr. Scott and multiple family members that were also franchise owners of various of the above-mentioned companies, they all sued and either withdrew or settled (no money exchanged) as you will see below.

Thomas Scott v. Leiby Goldberger and Curt Swanson, Docket No. 3:22-cv-00763 in the United States District Court for the Middle District of Tennessee (originally filed in Chancery Court for Davidson County, Tennessee at Nashville on August 24, 2022 as Thomas J. Scott v. Leiby Goldberger and Curt Swanson, Case No. 22-1140-I). Defendants removed the action to federal court on September 29, 2022. The plaintiff, Thomas J. Scott, the former member and COO of Clozetivity Franchising, LLC, Dryer Vent Squad Franchising, LLC, Frost Shades Franchising, LLC, and Magnetainment Franchising, LLC filed a suit against our CEO and COO, Leiby "Leo" Goldberger and Curt Swanson, respectively, alleging a breach of the duty of loyalty, duty of care, and duty of good faith and fair dealing in connection with his expulsion from the businesses. The plaintiff alleges the defendants concealed material information that they had a duty to disclose to plaintiff and in the Clozetivity, Dryer Vent Squad, Frost Shades, and Magnetainment Franchise Disclosure Documents. The plaintiff further alleges conversion, alleging the defendants seized control over his personal property at the time of his expulsion. The plaintiff alleges that following his expulsion, communications between the management team and the franchisees have defamed him and placed him in a false light and that defendant engaged in civil conspiracy in connection with his expulsion. Prior to Defendants filing an answer, Plaintiff dismissed the complaint without prejudice and without any settlement, and the Court entered an order reflecting the dismissal without prejudice on December 16, 2022.

Brand Journalists (They have since then rebranded as Brand J), LLC v. Leiby Goldberger and Curt Swanson, Docket No. 3:22-CV-00720 filed in the United States District Court for the Middle District of Tennessee on September 16, 2022.Plaintiff, Brand Journalists, LLC, a limited liability company wholly owned by Plaintiff Thomas J. Scott, the former member and Chief Operating Officer of Clozetivity Franchising, LLC, Dryer Vent Squad Franchising, LLC, Frost Shades Franchising, LLC, Magnetainment Franchising,LLC, and Home Based Franchise Group, LLC filed a suit against our CEO and COO Leiby "Leo" Goldberger and Curt Swanson, respectively, alleging, violation of the Computer Fraud and Abuse Act (18 U.S.C. § 1030), violation of the Stored Communications Act, violation of the Electronic Communications Protection Act, unjust enrichment, conversion, tortious interference with contract/procurement of breach of contract, and intentional interference with prospective economic advantage. Prior to Defendants filing an answer, Plaintiff dismissed the complaint without prejudice and without any settlement, and the Court entered an order reflecting the dismissal without prejudice on December 19, 2022.

Angie Scott v. Clozetivity Franchising LLC, Leiby Goldberger and Curt Swanson, Case No. 22-1310-II, filed in the Chancery Court for Davidson County, Tennessee at Nashville on October 2,2022. The plaintiff, Angie Scott, a former franchisee of Clozetivity (**as well as the wife of Thomas J.

Source: Item 3 — LITIGATION (FDD pages 11–15)