In New York, does the Fitstop Disclosure Document require any additional litigation to be disclosed?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 23: RECEIPTS]
No additional litigation is required to be disclosed in this Disclosure Document.
Item 4 is deleted and replaced with the following:
- Neither we nor any of our predecessors, affiliates, or officers, during the 10-year period immediately before the date of the Disclosure Document: (a) filed as debtor (or had filed against it) a petition to start an action under the U.S. Bankruptcy Code; (b) obtained a discharge of its debts under the Bankruptcy Code; or (c) was a principal officer of a company or a general partner in a partnership that either filed as a debtor (or had filed against it) a petition to start an action under the U.S. Bankruptcy Code or that obtained a discharge of its debts under the U.S. Bankruptcy Code during or within one year after the officer or general partner of the franchisor held this position in the company or partnership.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, no additional litigation is required to be disclosed in the Disclosure Document for New York. However, Item 3 is deleted and replaced with a modified version that outlines specific conditions regarding litigation involving Fitstop, its predecessors, individuals identified in Item 2, or any affiliate offering franchises under Fitstop's trademark.
The modified Item 3 states that there should be no pending administrative, criminal, material civil, or arbitration actions alleging felonies, violations of franchise, antitrust, or securities laws, fraud, embezzlement, fraudulent conversion, restraint of trade, unfair practices, misappropriation of property, or comparable allegations against the specified parties.
Furthermore, the modified Item 3 clarifies that pending actions, other than routine litigation incidental to the business, should not be significant in the context of the number of franchisees and the size, nature, or financial condition of the Fitstop franchise system or its business operations. This suggests that while routine litigation may occur, any significant legal issues must be disclosed, ensuring transparency for potential franchisees in New York.