What state agency was involved in litigation with Healthsource Chiropractic regarding disclosure documents?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
ation involves us:
Public Agency Orders
Commonwealth of Virginia v HealthSource Chiropractic, Inc. and Bernard Brozek; Case No. SEC-2019-00058. On January 29, 2020, we entered into and delivered a Settlement Order with the Virginia State Corporation Commission's Division of Securities and Retail Franchising (the "Division"). The Division alleged that our 2017 and 2018 disclosure documents failed to disclose a prior personal bankruptcy one of our officers, Bernard Brozek, and therefore, violated the Virginia Retail Franchising Act. We do not admit or deny the Division's allegation. In order to resolve this matter without the further cost and expense of formal proceedings, we agreed to make an offer to refund the initial franchise fees paid by the one purchaser during the subject time frame (up to a maximum of $80,000) and to pay the Division the sum of $9,000 in costs and civil penalties. We have completed making the refund to the designated purchaser and paying the required costs, Mr. Brozek reimbursed us for those payments, and Mr. Brozek is no longer employed by us.
The Commissioner of Financial Protection and Innovation of the State of California v. HealthSource Chiropractic, Inc. On July 20, 2021, we entered into a Consent Order with the California Commissioner of Financial Protection and Innovation (the "Commissioner"). The Commissioner determined that our 2017 and 2018 disclosure documents failed to contain a required disclosure concerning Mr. Brozek's personal bankruptcy and therefore violated Section 31200 of the California Franchise Investment Law. In order to resolve this matter we agreed to desist and refrain from the violation described ab
Source: Item 3 — Litigation (FDD pages 14–15)
What This Means (2025 FDD)
According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, two state agencies were involved in litigation with the company regarding its disclosure documents. The Virginia State Corporation Commission's Division of Securities and Retail Franchising (the "Division") alleged that Healthsource Chiropractic's 2017 and 2018 disclosure documents failed to disclose a prior personal bankruptcy of one of its officers, Bernard Brozek, which violated the Virginia Retail Franchising Act. To resolve this, Healthsource Chiropractic agreed to offer a refund of initial franchise fees (up to $80,000) to one purchaser and pay the Division $9,000 in costs and civil penalties.
Additionally, the Commissioner of Financial Protection and Innovation of the State of California (the "Commissioner") determined that Healthsource Chiropractic's 2017 and 2018 disclosure documents also failed to disclose Brozek's personal bankruptcy, violating Section 31200 of the California Franchise Investment Law. To resolve this, Healthsource Chiropractic agreed to cease the violation.
It is important to note that Healthsource Chiropractic did not admit or deny the allegations made by the Virginia Division. Furthermore, Bernard Brozek reimbursed Healthsource Chiropractic for the payments made to resolve the Virginia case and is no longer employed by the company. These legal issues are disclosed in Item 3 of the FDD, which covers litigation, and are important for prospective franchisees to review to understand the company's legal history and potential risks.