What was the defendant's offer to the plaintiffs in the ATAX, LLC case, as described in the Zoomin Groomin FDD?

According to Zoomin Groomin's 2025 Franchise Disclosure Document, in the case of Ira Lubert and John Martinson v. John T. Hewitt, ATAX, LLC, and Loyalty, LLC, the defendants offered to buy out the Plaintiffs' investments for a profit that would be beneficial to Plaintiffs. The plaintiffs in this case are investors in ATAX, LLC, claiming they were solicited to invest in ATAX as a qualified opportunity zone business (QOZB), but it did not qualify as such. They also allege that the defendants promised certain changes, including an amendment to ATAX's Operating Agreement and certain financial controls, which were not made. The plaintiffs further allege that Hewitt made cash withdrawals from ATAX and paid those funds to himself, Loyalty, and other Loyalty brand companies without ATAX Board approval.

This lawsuit includes claims of fraud, breach of fiduciary duty, conversion, breach of contract, unjust enrichment, violation of the Virginia Stock Corporation Act, and violation of the Pennsylvania Voidable Transfers Act. The plaintiffs are seeking a judgment, rescission of their investments, redemption of their ownership interests at a fair value, monetary damages to be determined at trial, fees, and interest. The defendants, including Hewitt, intend to deny the allegations and contest the claims vigorously. As of the FDD date, no trial date had been set.

For a potential Zoomin Groomin franchisee, this information is relevant because it discloses ongoing litigation involving John Hewitt, who is the Chief Executive Officer and Chairman of Loyalty. Since Loyalty is affiliated with Zoomin Groomin, any potential legal or financial repercussions from this case involving ATAX, LLC, could indirectly affect Zoomin Groomin. It is important to note that the offer to buy out the plaintiffs' investments was made by the defendants, suggesting an attempt to resolve the dispute out of court. However, the fact that the defendants intend to contest the claims indicates that the matter is not yet resolved and could potentially lead to further legal proceedings.