Frequently Asked Questions
- Why did I get the Notice?
- What is this lawsuit about?
- Why is this a class and stockholder derivative action?
- Why is there a Settlement?
- How do I know if I am part of the Settlement Class?
- Are there exceptions to being included in the Settlement Class?
- What if I am still not sure if I am included?
- What does the Settlement provide?
- How much will my payment be?
- How can I get a payment?
- When would I get my payment?
- How do I “opt out” (exclude myself) from the Settlement Class?
- Do I have a lawyer in this case?
- How will the lawyers be paid?
- How do I tell the Court that I do not like something about the Settlement?
- When and where will the Court decide whether to approve the Settlement?
- Do I have to come to the Settlement Hearing?
- May I speak at the Settlement Hearing?
- What happens if I do nothing at all?
- Are there more details about the proposed Settlement?
- How do I get more information?
- How will my claim be calculated?
- What is the ticker symbol/CUSIP?
- What are acceptable forms of supporting documentation?
Why did I get the Notice?
You or someone in your family may have held or owned the common stock of Franchise Group (f/k/a Liberty Tax Inc.) (NYSE: FRG) between January 1, 2019 and December 17, 2019 (the “Class Period”).
The purpose of the Notice is to explain the Action, the terms of the proposed Settlement, and how the Settlement affects the legal rights of Franchise Group stockholders, Class Members, and Franchise Group, Inc. f/n/a Liberty Tax, Inc.Back To Top
What is this lawsuit about?
This case is known as Franchise Group Settlement, Case No. 2019-0633-SG (the “Action”). The Court of Chancery of the State of Delaware is in charge of the Action and the case has been overseen by the Honorable Sam Glasscock III.
On July 10, 2019, the Company’s board of directors (the “Board”), upon the recommendation of a special committee of its directors comprising Patrick A. Cozza, Thomas Herskovits, Lawrence Miller, and G. William Minner Jr. (the “Special Committee” or “Special Committee Members”), approved the following transactions (collectively, the “Buddy’s Transactions”): (a) the Company would acquire Buddy’s Newco, LLC (“Buddy’s”) at a $122 million valuation (the“Buddy’s Merger”); (b) the Company would make a tender offer to acquire for $12 per share any and all shares of the Company’s common stock (“Company Common Stock”) not owned by Vintage or B. Riley or their affiliates (the “Tender Offer”); (c) an affiliate of Vintage would buy from the Company 2,083,333.33 shares of Company Common Stock for $12 per share (resulting in a $25 million equity financing) and, to the extent needed to fund the Tender Offer, buy additional shares of Company Common Stock for $12 per share (resulting in a further equity financing capped at $40 million); and (d) the Company would enter into a tax receivable agreement with the former equity holders of Buddy’s.
On August 1, 2019, the Company launched the Tender Offer and filed a solicitation statement on Schedule TO with the U.S. Securities and Exchange Commission (the “SEC” and “Original Disclosures”).
On August 8, 2019, the Company announced that it would (a) acquire Vitamin Shoppe, Inc. (“Vitamin Shoppe”) for approximately $208 million (the “Vitamin Shoppe Acquisition”); and (b) fund the Vitamin Shoppe Acquisition, in part, by selling shares of Company Common Stock to an affiliate of Vintage for $12 per share (resulting in an equity financing capped at $70 million) (the “Vitamin Shoppe Share Issuance”).
On August 12, 2019, Plaintiff Asbestos Workers’ Philadelphia Pension Fund (“Plaintiff Asbestos Workers”) filed a Verified Stockholder Class Action and Derivative Complaint (the “Initial Complaint”), Motion for Expedited Proceedings (the “Expedition Motion”), and Motion for Preliminary Injunction, contending that the Director Defendants and the Special Committee Members breached their fiduciary duties in connection with the Buddy’s Transactions and Vitamin Shoppe Share Issuance and failed to disclose certain material information in the Original Disclosures.
On August 27, 2019, the Company announced it would acquire from Sears Hometown and Outlet Stores, Inc. the businesses of its Sears Outlet segment and Buddy’s Home Furnishing Stores for approximately $133 million (the “SHOS Acquisition”).
On August 28, 2019, the Company announced it would fund the SHOS Acquisition, in part, by selling shares of Company Common Stock to an affiliate of Vintage for $12 per share (resulting in an equity financing capped at $40 million) (the “SHOS Share Issuance” and together with the Buddy’s Transactions and Vitamin Shoppe Share Issuance, the “Transactions”).
On August 30, 2019, following full briefing—and immediately before oral argument—on Plaintiff Asbestos Workers’ Expedition Motion, Defendants agreed to provide Plaintiff Asbestos Workers with certain expedited document discovery.
On October 16, 2019, the Company filed an amended and restated solicitation statement (the “Amended Disclosures”) mooting certain disclosure claims asserted by the Initial Complaint.
On October 23, 2019, the Company completed the SHOS Acquisition.
On October 23 and 25, 2019, respectively, Plaintiff Asbestos Workers filed a Verified Amended Stockholder Class Action and Derivative Complaint (the “Amended Complaint”) and a motion to preliminarily enjoin the Tender Offer (the “Injunction Motion”) contending that the Director Defendants and the Special Committee Members breached their fiduciary duties in connection with the Transactions and failed to disclose certain material information in the Amended Disclosures.
On November 5, 2019, Defendants made supplemental disclosures and Plaintiff Asbestos Workers determined not to continue to seek an injunction with respect to the disclosure claims asserted by the Amended Complaint (together with the Amended Disclosures, the “Supplemental Disclosures”). Plaintiff Asbestos Workers subsequently withdrew its Injunction Motion.
On November 13, 2019 at 5:00 p.m. Eastern Time, the Tender Offer expired. 3,970,938 shares of Company Common Stock were tendered pursuant to the Tender Offer.
On December 16, 2019, the Company completed the Vitamin Shoppe Acquisition.
On March 10, 2020, the Court granted Plaintiff Sciabacucchi’s motion to intervene in the Action.
On July 15, 2020, Plaintiffs filed a Verified Second Amended Stockholder Class Action and Derivative Complaint challenging the Transactions.
On August 18, 2020, following briefing, the Court heard oral argument on Plaintiff Asbestos Workers’ petition for an interim fee award (the “Interim Fee Petition”) of $975,000 for attorneys’ fees and expenses in connection with counsel’s work in obtaining the Supplemental Disclosures.
After extensive negotiations, on September 17, 2020, Plaintiffs and Defendants reached an agreement in principle to settle the Action and the Parties informed the Court that it would no longer need to resolve the Interim Fee Petition.Back To Top
Why is this a class and stockholder derivative action?
In a class action, one or more people and/or entities who were stockholders at the time the claim arose sue on behalf of and for the benefit of the individual class members, seeking to enforce the class members’ legal rights. In a stockholder derivative action, one or more people and/or entities who were stockholders at the time the claim arose sue on behalf of the subject company, seeking to enforce the company’s legal rights.Back To Top
Why is there a Settlement?
The Settlement set forth in the Stipulation reflects the results of the Parties’ negotiations and the final terms of their agreement, which was reached only after arm’s-length negotiations among the Parties, who were all represented by counsel with extensive experience and expertise in stockholder class action and derivative litigation.
The Parties recognize the time and expense that would be incurred by further litigation and the uncertainties inherent in such litigation. This Settlement is not evidence of the validity or invalidity of any claims or defenses in the Action or any other actions or proceedings, or of any wrongdoing by any of the Defendants or of any damages or injury to Plaintiffs, any Class Member or the Company.
Plaintiffs believe that the Released Defendant Claims had merit when filed and continue to have merit, and Plaintiffs are settling the Released Defendant Claims because they believe that the Settlement will provide substantial value to Class Members. Plaintiffs have concluded that the Settlement is fair, reasonable, and in the best interests of Class Members and the Company, and that it is reasonable to pursue the Settlement based on the terms and procedures outlined herein.
Defendants have denied, and continue to deny, all allegations of wrongdoing, fault, liability or damage with respect to all claims asserted or that could be asserted in the Action or any other action, in any court or tribunal, relating to the Tender Offer or the Transactions, including any allegations that Defendants have committed any violations of law, that they have acted improperly in any way, and that they have any liability or owe any damages of any kind to Plaintiffs, the Class and/or the Company. Defendants maintain that their conduct was at all times proper, in the best interests of Franchise Group and its stockholders, and in compliance with applicable law, and that if the case proceeded to trial and a decision were issued by the Court, they would have prevailed on all claims asserted against them. Defendants further deny any breach of fiduciary duties or aiding and abetting any breach of such duties. Defendants affirmatively assert that the Tender Offer and the Transactions provided Franchise Group and its stockholders, including Plaintiffs and the Class, with substantial benefits. Defendants also deny that Franchise Group or its stockholders were harmed by any conduct of Defendants alleged in the Action or that could have been alleged in the Action. Each of the Defendants asserts that, at all relevant times, they acted in good faith and in a manner believed to be in the best interests of Franchise Group and all of its stockholders. Defendants are entering into the Settlement in order to, among other things, eliminate the uncertainty, burden, inconvenience, expense, and distraction of further litigation; and to terminate all claims that were or could have been asserted by Plaintiffs, any other Class Member or the Company against Defendants in the Action or in any other action, in any court or tribunal, relating to the Tender Offer and the Transactions or the sales process leading to or disclosures associated with the Transactions.Back To Top
How do I know if I am part of the Settlement Class?
The Class includes any record holders and all beneficial owners of the common stock of Franchise Group (f/n/a Liberty Tax, Inc.) (NYSE: FRG) who held or owned such stock at any time during the Class Period (the period beginning on and including January 1, 2019 through and including December 17, 2019).Back To Top
Are there exceptions to being included in the Settlement Class?
Yes. You are not a member of the Class if you did not hold or own Franchise Group common stock at any time during the Class Period (the period beginning on and including January 1, 2019 through and including December 17, 2019). If you held or owned Franchise Group common stock some other time, or did not hold or own it at all, you are not included within the Class.
You are also not a member of the Class if you are an Excluded Person, as defined in the Stipulation.Back To Top
What if I am still not sure if I am included?
If you are still not sure whether you are included, you can ask for free help. You can contact the Settlement Administrator at info@FranchiseGroupSettlement.com, for more information. Or you can fill out and return the Proof of Claim Form, with appropriate supporting documentation, to see if you qualify.Back To Top
What does the Settlement provide?
In consideration for the full and final release, settlement, dismissal, and discharge of any and all Released Claims against the Releasees, the Parties agreed to a payment of five million six hundred thousand dollars and no cents ($5,600,000.00) (the “Settlement Amount”) that Defendants and/or insurance carriers shall cause to be paid.Back To Top
How much will my payment be?
At this time, it is not possible to make any determination as to how much any individual Class Member may receive from the Settlement.
Your share of the Net Settlement Amount will depend on several factors, including the following: how many Class Members submit timely and valid Proof of Claim forms.
See FAQ 22 for additional information.Back To Top
How can I get a payment?
The deadline for Non-Tendering Stockholders to submit a Proof of Claim form was March 22, 2021.Back To Top
When would I get my payment?
It is not possible at this time to determine when the Settlement proceeds will be distributed to eligible Class Members.
On April 16, 2021, The Court entered its Order and Final Judgment approving the Settlement.Back To Top
How do I “opt out” (exclude myself) from the Settlement Class?
This is a non-opt-out class and stockholder derivative action.Back To Top
Do I have a lawyer in this case?
The law firms of Grant & Eisenhofer P.A. and Friedman Oster & Tejtel PLLC are designated as counsel for the Class. These lawyers are called Plaintiffs’ Counsel. You will not be personally liable for the fees and expenses incurred by these lawyers, which will be paid from the Settlement Fund, as approved by the Court. If you want to be represented by your own lawyer, you may hire one at your own expense.Back To Top
How will the lawyers be paid?
Concurrent with seeking final approval of the Settlement, Plaintiffs’ Counsel intends to make a Fee Application to the Court for a Fee and Expense Award in an aggregate amount of up to one million eight hundred fifty thousand dollars and no cents ($1,850,000.00), inclusive of expenses incurred in connection with the Action. The Parties acknowledge and agree that the Fee and Expense Award shall be paid solely from, and not in addition to, the Settlement Amount. The Fee Application shall be the only request for attorneys’ fees and expenses filed by or on behalf of Plaintiffs and their counsel.Back To Top
How do I tell the Court that I do not like something about the Settlement?
The deadline to object to the Settlement was April 2, 2021.
Unless the Court otherwise directs, any Person who fails to object in the manner described above shall be deemed to have waived and forfeited any and all rights it/she/he may otherwise have to object to the Settlement and/or any Fee and Expense Award to Plaintiffs’ Counsel (including any right of appeal) and shall be forever barred from raising such objection in the Action or any other action or proceeding. Class Members and other current Company stockholders who did not object did not need to appear at the Settlement Hearing or take any other action to indicate their approval.Back To Top
When and where will the Court decide whether to approve the Settlement?
The Court held a Settlement Hearing on April 16, 2021. On April 16, 2021, the Court entered the Order and Final Judgment finding, among other things, that the Settlement was fair, reasonable, and adequate and in the best interests of the Settlement Class.Back To Top
Do I have to come to the Settlement Hearing?
Settlement Class Members did not need to attend the Settlement Hearing. The Court considered any submission made in accordance with the provisions below even if a Settlement Class Member did not attend the hearing. You can participate in the Settlement without having attended the Settlement Hearing.Back To Top
May I speak at the Settlement Hearing?
The Settlement Hearing was held on April 16, 2021.Back To Top
What happens if I do nothing at all?
If you do nothing, all of your claims against the Defendants and the Releasee(s) will be released. Additionally, if you are a Non-Tendering Stockholder and you failed to timely submit a valid Proof of Claim form, you will not receive any money from this Settlement, because it is necessary for such stockholders to have submitted a Proof of Claim form, with appropriate supporting documentation, to share in the Settlement proceeds.Back To Top
Are there more details about the proposed Settlement?
For a more detailed statement of the matters involved in the Action, you may inspect the pleadings, the Stipulation, the Orders entered by the Court, and other papers filed in the Action at the Office of the Register in Chancery in the Court of Chancery of the State of Delaware, 34 The Circle, Georgetown, Delaware 19947, during regular business hours of each business day, or the Important Documents tab of this website and http://www.gelaw.com. If you have questions regarding the Settlement, you may write or call Plaintiffs’ counsel: Kimberly Evans, GRANT & EISENHOFER P.A., 123 Justison Street, 7th Floor, Wilmington, DE 19801, (302) 622-7000; and Jeremy Friedman, FRIEDMAN OSTER & TEJTEL PLLC, 493 Bedford Center Road, Suite 2D, Bedford Hills, NY 19507, (888) 529-1108.Back To Top
How do I get more information?
For even more detailed information concerning the matters involved in this Action, reference is made to the Stipulation, to the pleadings in support of the Settlement, to the Orders entered by the Court, and to the other papers filed in the Action, which are posted on this website here.Back To Top
How will my claim be calculated?
To determine the size of the settlement distribution (the “Settlement Distribution Amount”) to each Tendering Stockholder, the Administrator shall divide the number of Tendering Shares owned by the Tendering Stockholder by the Total Eligible Shares and multiply the quotient by the Net Settlement Amount.
To determine the size of the Settlement Distribution Amount to each Non-Tendering Stockholder, the Administrator shall divide the number of Non-Tendering Shares owned by the Non-Tendering Stockholder by the Total Eligible Shares and multiply the quotient by the Net Settlement Amount.Back To Top
What is the ticker symbol/CUSIP?
The CUSIPs for Franchise Group, Inc. (f/n/a Liberty Tax) during the Class Period are 53128T102 and 35180X105. The ticker symbol from between January 1, 2019 and December 17, 2019 was FRG.Back To Top
What are acceptable forms of supporting documentation?
Acceptable supporting documentation includes trade confirmations, official monthly, quarterly or year-end broker statements or other account statements to verify purchases, sales or beginning or ending holdings. Include documentation to support each transaction. Stock certificates may be used to support the amount of shares held at the beginning or end of the class period, but they are not evidence for when and how much the shares were purchased.
If you no longer have the supporting documentation you should consult with your broker or financial advisor, who may be able to obtain the documents for you. In the case that you cannot locate your supporting documentation, you can ask your broker to write a letter on letterhead detailing purchases, sales and beginning and ending holdings.
We recommend that you file your claim to the best of your ability, as accurately as possible. Ultimately, however, you may be required to provide independent supporting documentation to verify your claim.Back To Top