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Log In / Register | Jul 23, 2018

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Don Sniegowski's picture

Franchisors not required to disclose case dismissals

The FDD’s requirement of Item 3 disclosure in the Franchise Rule. It says:

For purposes of this disclosure, a party is “held liable” if that party must pay money or other consideration, must reduce an indebtedness by the amount of an award, cannot enforce its rights, or must take action adverse to its interests. Accordingly, dismissals, including a dismissal concluding an adversarial proceeding, need not be disclosed.

Since the franchisees lost and their case was dismissed, it seems Culver’s is not required to reveal it — even though, frankly, buyers would want to know. 

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