Item 1. Legal Proceedings
Item 1. Legal Proceedings.
The material set forth in Note 14 (pertaining to information regarding legal contingencies) of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference.
Item 1A. Ris k Factors.
The Company has included in Part 1, Item 1A of Part 1 of its Annual Report on Form 10-K for the year ended December 31, 2025, a description of certain risks and uncertainties that could affect the Company's business, future performance or financial condition (the “Risk Factors”). There have been no material changes to the Risk Factors, except as described below. Our operations could also be affected by additional factors that are not presently known to us or by factors that we currently consider immaterial to our business.
Our review of strategic alternatives may not result in a transaction and could adversely affect our business, operations and stock price.
As previously disclosed in the Company's current report on Form 8-K filed on April 7, 2026, our Board of Directors has initiated a review of strategic alternatives intended to maximize stockholder value, which may include a sale of the Company, a merger, or another strategic or financial transaction. This review is ongoing and there can be no assurance that the process will result in the consummation of any transaction, or that any transaction that may be completed will be on terms favorable to our stockholders, or at all.
The strategic review process may cause uncertainty among our employees, franchisees, lenders, business partners and other stakeholders, which could adversely affect our ability to retain and motivate personnel, maintain franchisee engagement, or execute our operational initiatives. In addition, the process may divert the attention of our Board and management from the ongoing operation of the business at a time when consistent execution remains critical to our performance.
Speculation regarding the outcome of the strategic review, including the possibility that no transaction will be completed, may also contribute to increased volatility in the market price of our Class A common stock. Further, if the review does not result in a transaction, we may be subject to negative perceptions from investors or other stakeholders regarding our strategic direction.
The availability, timing and valuation of any strategic alternative may be adversely affected by our operating performance, franchisee economics, brand concentration, regulatory exposure and other risks described in this Quarterly Report and in our Annual Report on Form 10‑K, any of which could limit perceived strategic options or reduce potential transaction value.
Our recent Board and management changes, including a reduced number of independent directors, could disrupt our governance, strategic review process and overall business operations.
We have experienced significant changes in the composition of our Board of Directors and senior management over recent periods, including the departure of multiple directors and executive officers. As a result, our Board currently operates with a smaller number of directors, including a reduced pool of independent directors, and relies on a limited number of individuals to satisfy applicable independence and committee composition requirements.
While we believe our current Board composition satisfies applicable requirements, any additional departures of independent directors could require us to reconstitute Board committees, seek waivers or extensions from the New York Stock Exchange, or otherwise take remedial action, which could disrupt our governance processes and create uncertainty. These risks may be heightened during the pendency of our review of strategic alternatives, when continuity, independence and availability of directors are particularly important.
Further, frequent or unexpected changes in Board or management composition may adversely affect the consistency of our strategic direction, internal controls, decision‑making processes and oversight of management, and could negatively impact investor, franchisee or employee confidence in the Company.
Item 2. Unregistered Sales of Equit y Securities and Use of Proceeds.
None.
Item 3. Defaults Upo n Senior Securities.
None.
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Item 4. Mine Safe ty Disclosures.
Not applicable.
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