How much was Golden Krust Caribbean Restaurant awarded in the prior arbitration in 2018?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
nded December 31, 2023, were purchased from three suppliers. Approximately 53% of goods purchased during the years ended December 31, 2023, were purchased from one supplier
NOTE 13 RISKS AND UNCERTAINTIES
The Company is involved in various court cases and legal proceedings, most of which, the company believes will have outcomes in its favor, or it has already been awarded damages that are being contested by the other party(ies). No accrual has been made for potential legal settlements or awards that the company believes it is entitled to, as they have not yet been received by the Company. In addition, the Company is a party to a lawsuit with a former franchisee, whose franchise agreements were terminated in 2018 due to material defaults in those agreements, as determined by the Company. The former franchisee filed a demand for arbitration against the Company in October 2022, after the Company prevailed in a prior arbitration in 2018. The Company was awarded approximately $758,000, plus accrued interest, in that proceeding, which to this date, has not been collected. The company is being accused of breaching its franchise agreement, among other related matters. The parties have completed discovery on the first phase, and a hearing is set for April 2024. In the event any claims remain after the hearing and award in the first phase of the arbitration, the parties will set a schedule for the second phase of the arbitration, in which the issues of whether there is any liability and damages will be resolved. The company intends to vigorously defend itself in the arbitration and it is believed that the majority, if not all, of
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to the 2024 Franchise Disclosure Document, Golden Krust Caribbean Restaurant was awarded approximately $758,000, plus accrued interest, in a prior arbitration in 2018. This award stemmed from a dispute with a former franchisee whose agreements were terminated due to material defaults. As of the FDD's publication, Golden Krust Caribbean Restaurant had not yet collected this amount.
In October 2022, the former franchisee filed a demand for arbitration against Golden Krust Caribbean Restaurant, alleging breach of the franchise agreement. The parties have completed discovery on the first phase, and a hearing is set for April 2024. The company intends to vigorously defend itself in the arbitration and it is believed that the majority, if not all, of the claims, will be dismissed after the first phase of the arbitration; however, at this stage, if the Company was unsuccessful in its defense, the amount of an unfavorable outcome or range of potential loss cannot be reasonably estimated.
This situation presents a risk for potential franchisees. It highlights the possibility of disputes arising with franchisees and the potential for protracted legal battles. The fact that Golden Krust Caribbean Restaurant has not yet collected the $758,000 award also suggests potential difficulties in enforcing legal judgments. Prospective franchisees should consider these factors and conduct thorough due diligence before investing.