The FTC and eight states sue the restaurant tech vendor that many chains run on, over fees averaging USD 900 a month

The vendor layer that sits under modern restaurant operations is now in court. According to Payments Dive on 29 October 2026, the US Federal Trade Commission and eight states sued Toast that day in the US District Court for the Northern District of California, alleging hidden fees, unauthorised charges and subscriptions that were hard to cancel.

What the complaint alleges

Restaurant Dive, on 30 October 2026, reports that restaurants must enrol in auto-renewing subscriptions costing an average of USD 900 a month, with the figure varying by the number of terminals and bundled services. The same report says the lawsuit alleges false claims about free hardware and about 24/7/365 support, and states that none of Toast's hardware is actually zero dollars.

Insurance Journal, on 3 November 2026, adds detail on the exit side: early termination fees of USD 150 per remaining month of contract, with one case in which the fee exceeded USD 5,000. It also lists add-ons allegedly charged without consent, including employee timekeeping, payroll processing and payroll tax filing.

Payments Dive notes that until July 2023 Toast collected a 99-cent fee from diners ordering online on orders above USD 10, with testing beginning in September 2021. The claimed violations are the FTC Act, the 2010 Restore Online Shoppers Confidence Act and state consumer protection laws. Restaurant Dive reports the lawsuit says at least tens of thousands of consumers complained to the FTC and to Toast.

Toast says it has cooperated with the FTC since mid-2025 and will defend itself, and argues that no court has held that the 2010 statute applies to negotiated business-to-business agreements.

Why a franchise system should read this closely

None of the three reports frames this as a franchising story, and none mentions franchisees. That is precisely the gap worth noticing. In a franchise system, the point-of-sale and payments stack is often specified by the franchisor and signed by the franchisee. If the terms are the problem, the franchisee carries the monthly cost and the exit fee while the specification decision sat elsewhere.

The sources also differ on who is suing. Payments Dive names California as a joining party. Insurance Journal names the county counsels of Los Angeles and San Francisco. The discrepancy is in the reporting and is not resolved by either source.

This article is information, not legal or investment advice.

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