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Commitments and Contingencies
3 Months Ended
Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

(3) Commitments and Contingencies

 

Litigation

 

The Company is subject to litigation claims arising in the ordinary course of business. The Company believes that it has adequately accrued for legal matters in accordance with the requirements of GAAP. The Company records litigation accruals for legal matters which are both probable and estimable and for related legal costs as incurred. The Company does not reduce these liabilities for potential insurance or third-party recoveries.

 

On February 24, 2017, franchisee, Team Kasa, LLC, along with its three owners, filed suit in the Eastern District of New York (Case No. 2:17-cv-01074) against former CEO Brian Pappas and Franventures, as well as four other defendants seeking damages under the New York Franchise Sales Act. The same Plaintiffs also initiated an arbitration proceeding against the Company on the same issues (American Arbitration Association, Case No. 01-17-0001-1968), alleging the Company is jointly and severally liable for damages resulting from the allegations against Mr. Pappas and Franventures. The Company is contesting the allegations and its liability for any damages in the arbitration case. Both cases have been held in abeyance as the parties seek a resolution.

 

Lease

 

On October 21, 2021, the Company leased approximately 2,480 square feet of office space at 1637 S. Main Street, Milpitas, CA 94035 for its corporate offices. The lease has a term of two years and one month. The Company is obligated to pay base rent of $4,588 per month in the first year, $4,726 per month in the second year, and $4,867 per month in the last month, plus a pro rata share of common area expenses. On November 1, 2021, the Company relocated its corporate offices to the Milpitas, California location.