Popular Pet Retailer Files Chapter 11 Bankruptcy After Franchise Dispute

Founded in November 2016 by Joseph and Lynette Naughton, the business built its reputation selling fresh-baked dog treats, custom celebration cakes and professional grooming services.

Rudy Blalock

Published: 1/18/2026, 11:42:43 PM EST

Popular Pet Retailer Files Chapter 11 Bankruptcy After Franchise Dispute — A dog eyes up a tasty treat at the bakery section of Three Dog Bakery in Hong Kong on Jan. 18, 2008. (Mike Clarke/AFP via Getty Images)

A Florida pet retailer that operated under the Three Dog Bakery brand has filed for bankruptcy protection following a legal battle with its franchisor, according to court documents filed last week.

J.L.E.T. Enterprises, which ran specialty pet stores in Naples and Sarasota, Florida, under names including Lucy's Dog Bakery & Spa and Three Dog Bakery & Grooming, filed for Chapter 11 protection on Jan. 15 in the U.S. Bankruptcy Court for the Middle District of Florida.

Founded in November 2016 by Joseph and Lynette Naughton, the business built its reputation selling fresh-baked dog treats, custom celebration cakes, and professional grooming services. Its flagship location occupied 1,500 square feet at The Shoppes at University Town Center in Sarasota.

The North Port-based company reported assets between $100,000 and $500,000 against liabilities ranging from $1 million to $10 million, RK Consultants announced in a Jan. 15 post on X. The bankruptcy filing lists between 50 and 99 creditors.

Three Dog Bakery was founded in 1989 when its original dog bakery opened in Kansas City, Missouri, with a mission of “making dog treats worthy of the word ‘treat,'” according to its website.

J.L.E.T. Enterprises' bankruptcy filing caps a tumultuous year that saw the company's franchise agreement terminated in May 2025.

What followed was a legal dispute in the Western District of Missouri, where Three Dog Bakery accused J.L.E.T. Enterprises of trademark infringement and violating non-compete provisions after the company attempted to operate independently.

The company filed under Subchapter V of the bankruptcy code, a streamlined reorganization process designed specifically for small businesses.

According to bankruptcy court filings, the company operated under multiple names including Lucy's Dog Bakery & Spa, Three Dog Bakery & Grooming, and Diversified Services SWF.

Under the Subchapter V process, J.L.E.T. Enterprises must submit a reorganization plan by April 15, 2026.

The company plans to use the bankruptcy process to address mounting debts to landlords and legal counsel while resolving ongoing litigation with its former franchisor.

The bankruptcy filing comes during challenging times for pet retailers nationwide. According to United Consumer Financial Services (UCFS), the pet retail industry faces intense competition from national chains and online giants including Amazon, Walmart, Chewy, and Bark Box.

Roughly 70 percent of American households own pets, creating a large market but also fierce competition, according to UCFS, which is a subsidiary of Berkshire Hathaway. The industry also faces regulatory challenges, with four states—California, Illinois, New York, and Maryland—banning the sale of pets in retail stores to combat puppy mills, according to animal protection organizations, such as the American Society for the Prevention of Cruelty to Animals.

Economic pressures have also mounted. About 43 percent of pet owners have noticed rising costs of pet ownership, and 24 percent worry about affordability of basic pet needs, according to a report from Rover.

J.L.E.T. Enterprises now has 90 days to propose a plan that satisfies creditors while potentially allowing the business to continue operations in some form.