Driven Brands Holdings Inc.’s board of directors and executive officers are facing allegations from a shareholder who claims they issued false and misleading financial statements for nearly three years, resulting in significant harm to the company and its investors. The complaint, filed by Michael Lee derivatively on behalf of Driven Brands Holdings Inc. in the United States District Court for the Western District of North Carolina on April 17, 2026, names Jonathan Fitzpatrick, Daniel Rivera, Neal Aronson, Cathy Halligan, Damien Harmon, Chad Hume, Timothy Johnson, Rick Puckett, Karen Stroup, Peter Swinburn, Michael Thompson, Jose Tomas, Michael Beland, Michael F. Diamond, Gary W. Ferrera, and Rebecca Fondell as defendants.
According to the filing (Case No. 3:26-cv-00302), Lee alleges that from at least May 3, 2023 through February 24, 2026 (the “Relevant Time Period”), the board and senior executives breached their fiduciary duties by allowing Driven Brands to make materially false statements about its financial condition and business operations. The lawsuit also asserts violations of Section 14(a) of the Securities Exchange Act of 1934 related to allegedly misleading proxy statements.
The complaint outlines that Driven Brands—described as claiming to be North America’s largest automotive services provider—repeatedly assured investors it was executing a steady growth strategy focused on cash generation. However, Lee alleges that during this period the company concealed material weaknesses in its internal controls over financial reporting. As a result, key financial metrics were misstated across fiscal years 2023 and 2024 as well as the first three quarters of fiscal year 2025.
The issue became public before markets opened on February 25, 2026 when Driven Brands announced it had identified “material errors” in its financial statements for fiscal years 2023 and 2024 along with all quarterly periods in fiscal year 2024 and the first three quarters of fiscal year 2025. The company advised investors that these statements “should not be relied upon” and would require restatement due to “material weaknesses in the Company’s internal control over financial reporting.” It further disclosed that “internal control over financial reporting and disclosure controls and procedures were not effective as of December 27, 2025.” In addition to lease adjustments affecting right-of-use assets and liabilities on balance sheets for late-2024 through September 2025, errors included unreconciled differences for cash accounts dating back to fiscal year 2023 or earlier; expense classification mistakes; income tax provision issues; revenue recognition problems; fixed asset errors; cloud computing misstatements; lease cash application mistakes; balance sheet misclassifications; income statement misclassifications; and inappropriate revenue recognition within certain business units.
Following these disclosures—and news that fourth-quarter results for fiscal year 2025 would be delayed—Driven Brands’ stock price dropped by $5.01 per share (about thirty percent), closing at $11.60 per share on February 25, 2026.
Lee’s complaint argues that these actions caused substantial harm to Driven Brands by damaging its reputation with investors and incurring costs related to defending ongoing litigation (including a referenced securities class action). The suit also contends that false proxy statements issued during annual meetings led shareholders to re-elect directors based on incomplete or inaccurate information about risk oversight practices.
The legal filing details how members of both management and various committees—including those responsible for audit oversight—allegedly failed in their duties under both company policy documents (such as committee charters) and broader fiduciary obligations under Delaware law. These failures are described as including insufficient supervision over internal controls or public disclosures regarding finances.
Plaintiff Michael Lee seeks relief on behalf of Driven Brands itself rather than individual shareholders—a so-called derivative action—including damages suffered by the company due to alleged breaches by directors or officers; restitution from any improper benefits received by defendants; implementation of corporate governance reforms; costs associated with bringing suit; pre-judgment interest; attorneys’ fees; expert witness fees; other litigation expenses; plus any further relief deemed appropriate by the court.
The document lists no specific attorney names but identifies Michael Lee as plaintiff acting derivatively for Driven Brands Holdings Inc., with nominal defendant status assigned to Driven Brands itself. The case is docketed under Case No. 3:26-cv-00302.
Source: 326cv00302_Lee_v_Fitzpatrick_Complaint_District_New_Jersey.pdf
