Franchise & Business Opportunity
Case Summaries: 1995 - 1996

F.T.C. v. Ad-Com International, Inc., Civ. No. 96-1472-LGB (VAP)(C.D. Cal. 1996).

This case concerns the sale of a 900 number business opportunity. The Commission's complaint alleges that defendants Lorraine Corrales, Anthony Catalano, and Ad-Com International violated the Franchise Rule by: (1) failing to provide purchasers with complete and accurate disclosure documents in a timely manner; and (2) making earnings claims without providing purchasers with an earnings claims document. The complaint also alleges that the defendants violated the Commission's 900-Number Rule by providing services to entities which it knew or should have known used 800 numbers in a manner that would result in the calling party being called back collect for services or products.

F.T.C. v. Allstate Business Consultants Group, Inc., Case No. 95-6634-CIV-Ryskamp (S.D. Fla. filed July 10, 1995)

This case concerns the sale of candy vending machine business opportunities. The Commission's complaint alleges that defendants Allstate Business Consultants Group, Inc., Edward Wong, and Enrio Pace violated Section 5 by misrepresenting: (1) that purchasers would earn certain levels of income, such as $100,000 a year; and (2) the legitimacy and trustworthiness of references. In addition, the Commission's complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide an earnings claims documents, failing to have a reasonable basis for earnings claims at the times they were made, or failing to make required disclosures in immediate conjunction with such claims.

F.T.C. v. Bureau 2000 International, Civ. No. 96-1473-DT-(JR)(C.D. Cal. 1996).

This case concerns the sale of 900 number business opportunities. The Commission's complaint alleges that defendants Krystee Carr, Dave Ryder, Bureau 2000 International, Inc., and Malibu Media, Inc., violated the Franchise Rule by: (1) failing to provide purchasers with complete and accurate disclosure documents in a timely manner; and (2) making earnings claims without providing purchasers with an earnings claims document.

F.T.C. v. Business Opportunity Center, Inc., Case No. 95-8429-Zloch (S.D. Fla. filed June 10, 1995)

This case concerns the sale of franchises and business opportunities to sell a product called the Alcohol Neutralizer, an herbal capsule the defendants claim will lower blood alcohol levels by 50 percent in an hour. The Commission's complaint alleges that defendants Diane Jonas, Paul Jonas, Robert Brian Roemer, James Raim, and the Business Opportunity Center, Inc. violated Section 5 by misrepresenting: (1) that the Federal Food and Drug Administration has approved or recognized as safe the Alcohol Neutralizer or its ingredients; and (2) that independent researchers at the Harvard Medical School found that the ingredients of the Neutralizer rapidly reduced the level of alcohol in a person's blood. The complaint also alleged that defendants violated the Franchise Rule by: (1) failing to provide prospective franchisees with the names and addresses of existing franchisees; (2) failing to provide earnings claims documents and failing to have a reasonable basis for earnings claims at the times they were made.

F.T.C. v. Comtel Communications Global Network, Inc., Civ. No. 96-3134-CIV- Highsmith (S.D. Fla. 1996).

This case concerns the sale of pay phone business opportunities. The Commission’s complaint alleges that defendants Comtel Communications Global Network, Marc Zimmerman, Victoria Zimmerman, Eric Zimmerman, and Philip Berger violated Section 5 by misrepresenting purchasers’ potential income. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide purchasers with a complete and accurate disclosure document within the time period required by the Rule; and (2) making earnings claims without providing purchasers with an earnings claims document.

F.T.C. v. Creative Technology International, Inc., Civ. No. _______ (N.D. Ga. 1996).

This case concerns the sale of business opportunities involving vending machines which distribute disposable cameras and other film products. The Commission’s complaint alleges that defendants Creative Technology International Inc., Georgia International Export Co., Inc., L&S Manufacturing, Inc., Andrew Gilmore, Steven Axelrod, Arnold Filner, and Wayne Gregory violated Section 5 by misrepresenting that: (1) purchasers will earn specific levels of income; (2) certain company-selected references have purchased one or more of the defendants’ vending machines and could provide a reliable description of the references’ experience with the defendants’ business opportunity; (3) locating companies provided or recommended by the defendants are typically successful in placing purchasers’ vending machines in profitable locations; and (4) locating companies provided or recommended by the defendants will replace any location, at the request of the purchaser, for any reason. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide purchasers with a complete and accurate disclosure document containing required information on refunds, reference names, and audited income statements; and (2) making earnings claims without providing purchasers with an earnings claims document.

F.T.C. v. Fresh-O-Matic Corp., Civ. No. 96-CV-315-CAS (E.D. Mo. 1996).

This case concerns the sale of a soft-drink vending machine business opportunity. The Commission's complaint alleges that defendant Fresh-O-Matic violated Section 5 by misrepresenting: (1) purchasers' potential income; and (2) site location assistance provided to purchasers. In addition, the complaint alleges that the defendant violated the Franchise Rule by: (1) failing to provide purchasers with a complete and accurate disclosure document containing required information on refunds, reference names, and audited income statements; and (2) making earnings claims without providing purchasers with an earnings claims document. The case was settled with Fresh-O-Matic agreeing to pay $100,000 in consumer redress.

F.T.C. v. Genesis One Corp., Civ. No. CV-96-1516-MRP (MCX)(C.D. Cal. 1996)

This case concerns the sale of a 900 number business opportunity. The Commission's complaint alleges that defendants Genesis One Corp., Alex Bass, and Rose Kistoria violated Section 5 by misrepresenting purchasers' potential income. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide purchasers with a complete and accurate disclosure document; and (2) making earnings claims without providing purchasers with an earnings claims document.

F.T.C. v. Joseph Hayes, et al, Civ. No. 4:96CV06126SNL (E.D. Mo 1996).

This case concerns the sale of hotel lobby directory board business opportunities. The Commission’s complaint alleges that defendants Joseph Hayes, Thelma Hayes, Allan O’Hearn, Ann Fox, and Automated Guest Directories, Inc., violated Section 6 by misrepresenting: (1) that purchasers could expect to earn specific levels of income; (2) that purchasers would obtain a complete “turnkey” business, complete with prime hotel lobby locations and sales assistance. The Commission’s complaint also alleges that the defendants violated the Franchise Rule by: (1) failing to provide investors with complete and accurate disclosure documents; and (2) making earnings claims without providing purchasers with an earnings claims document.

F.T.C. v. Independent Travel Agencies of America Association, Inc. , Case No. 95-6137-CIV-Gonzalez (S.D. Fla. filed Feb. 13, 1995)

This case concerns home-based travel agencies. The Commission's complaint alleges that defendants ITAA, David Eugene Mueller, and Travel Industry Council, Inc. violated Section 5 by making numerous misrepresentations to investors including: (1) that investors would have access to, and support from, thousands of suppliers of travel services, including airlines; (2) that investors would be licensed or certified as travel agents pursuant to some official authority or widely-recognized industry standards independent of ITAA; and (3) that investors would receive various benefits, such as free computers and free or deeply discounted travel opportunities. The complaint also alleged that defendants misrepresented that investors would achieve certain sales or profits, such as $25,000 in their first year or $250,000 in sales, and that investors have enjoyed a 100 percent success rate. In addition, the Commission's complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide prospective franchisees with disclosure documents; and (2) failing to provide earnings claims documents, and failing to have a reasonable basis for earnings claims at the times they were made.

F.T.C. v. Infinity Multimedia, Inc., Civ. No. 96-6671-CIV-Gonzalez (S.D. Fla. 1996).

This case concerns the sale of a business opportunity involving computer software display racks. The Commission's complaint alleges that defendants Infinity Multimedia, Inc., Quality Marketing Associates, Inc., William B. Chappie, and Joseph Anthony Wentz violated Section 5 by misrepresenting: (1) that purchasers could reasonably expect to make a specified amount of earnings; (2) that purchasers would recover the amount they invest; (3) that all prior purchasers of the defendants' business opportunities continue to be profitable; (4) that defendants' references had previously purchased the business opportunity; and (5) that locating companies are typically successful in placing the display racks in profitable locations. The complaint also alleges that the defendants imposed undisclosed time restrictions on their exchange policy. Finally, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide prospective investors with complete and accurate disclosure documents; and (2) making earnings claims without providing an earnings claims document.

F.T.C. v. Majors Medical Supply, Civ. No. 96-8753-Zloch (S.D. Fl. 1996).

This case concerns the sale of durable medical equipment franchises throughout the country. The Commission’s complaint alleges that defendants Majors Medical Supply, Stuart Phillips, and Joanne Phillips violated Section 5 by misrepresenting the initial startup costs and the profit that would be achieved after three months. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide purchasers with a basic disclosure document, and (2) making earnings claims without providing purchasers with an earnings claim document.

F.T.C. v. Marquette, Inc., Case No. (N.D. Ga. filed July 1995)

This case concerns the sale of medical billing software business opportunities. The Commission's complaint alleges that defendants Marquette, Inc., Lawrence Ken Swenson, Amy Felton, Russell Brentmayer, and Monte Bolt violated Section 5 by misrepresenting: (1) that Marquette is or acts as a clearinghouse for the electronic submission of medical claims; (2) the nature of assistance offered, such as training; (3) the nature of company selected references; (4) that purchasers can reasonably expect to earn specific levels of earnings; and (5) that purchasers will receive exclusive territories. The complaint also alleges that defendants violated the Franchise Rule by: (1) failing to provide prospective franchisees with complete and accurate disclosure documents in a timely manner and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

F.T.C. v. J.P. Meyers Company, Inc., Civ. No. 96-CV-1671 (E.D. Pa. 1996).

This case concerns the sale of 900 number business opportunities. The Commission's complaint alleges that defendants Joseph Shapiro and J.P. Meyers Company, Inc., violated the Franchise Rule by: (1) failing to provide purchasers with complete and accurate disclosure documents within the time period required by the Rule; and (2) making earnings claims without providing purchasers with an earnings claims document.

F.T.C. v. Mini Snacks, Inc., Case No. C95-0581 (W.D. Wa. filed April 17, 1995)

This case concerns a candy and snack vending machine franchise business. The Commission's complaint alleges that defendants Mini Snacks, Inc., John Sanchez, and Tim McCarty violated Section 5 by making several material misrepresentations to investors. Defendants allegedly misrepresented: (1) that investors would recover their initial investments quickly and would earn up to $1,890 per machine, while working only a few hours a week; (2) that defendants had high-traffic locations available for machines; (3) that the machines require little maintenance or repair; (4) that locators referred to investors can be depended upon to secure profitable locations; and (5) that defendants will deliver the vending machines within a stated period of time. The complaint also alleged that defendants violated the Franchise Rule by: (1) failing to provide prospective franchisees with an accurate and complete disclosure document within the time period required by the Rule; and (2) making earnings claims without providing prospective franchisees with an earnings claim document. The case was settled with the defendants paying $100,000 in consumer redress.

FTC v. Mini-TV USA, Inc., Case No. 95-1209-CIV-T-17A (M.D. Fla. filed July 25, 1995)

This case concerns the sale of a business opportunity involving placing mini, coin-operated television sets in restaurants, laundromats, and other locations. The Commission's complaint alleges that defendants Mini-TV USA, Inc. and Edmund Albright violated Section 5 by misrepresenting: (1) investors' potential earnings; and (2) the ease with which the television sets could be located. The complaint also alleged that the defendants violated the Franchise Rule by: (1) failing to provide prospective franchisees with a basic disclosure document within the times required by the Rule; and (2) the making of earnings claims without providing provide prospective franchisees with an earnings claims document. The matter was settled with defendants agreeing not to violate the Franchise Rule and prohibiting defendants from misrepresenting prospective investors' earnings potential, as well as the ease or difficulty of obtaining customers, locations, or outlets. Based on the defendants' lack of assets, the settlement does not require consumer redress.

F.T.C. v. Mortgage Service Associates, Inc., Case No. 395-CV-1362 (AVC) (D. Conn. filed July 11, 1995)

This case concerns the sale of property inspection franchises. The defendants are Mortgage Service Associates, Inc., MSA Nationwide Field Services, Inc., J.D. Raffone Associates, Inc., Joseph D. Raffone, and Vita L. Raffone. The Commission's complaint alleges that the defendants violated Section 5 by misrepresenting: (1) that purchasers can reasonably expect to earn specific levels of income; and (2) that the franchisor will pay each franchisee a certain amount for each inspection performed. The complaint also alleges that the defendants violated the Franchise Rule by: (1) failing to disclose completely and accurate litigation history; (2) failing to disclose completely and accurately the names and addresses of franchisees and related statistic data; (3) failing to provide an earnings claims documents; and (4) making earnings claims that contradict statements in their disclosure document that they do not make such claims.

F.T.C. v. Panoramic Multimedia, Inc., Case No. 95-K-1708 (D. Colo. filed July 10, 1995)

This case concerns the sale of franchises to sell CD-ROM computer software through display racks located in retail outlets. The Commission's complaint alleges that defendants Mackie Services, Inc., Panoramic Multimedia, Inc., Randy Prefer, and Stanley L. Katz violated Section 5 by making numerous misrepresentations to investors including: (1) that investors would achieve certain sales or profits, such as sales of 2-3 CDs per day per display or profits of $25,000 to $100,000 per year; (2) that the CD-ROM software supplied by defendants sold for $79 to $149 in the market; and (3) that company supplied references had purchased one of defendants' distributorships and would provide accurate descriptions of their experiences as a distributor. In addition, the Commission's complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide prospective franchisees with disclosure documents; (2) failing to provide earnings claims documents; and (3) failing to have a reasonable basis for earnings claims at the times they were made.

F.T.C. v. Pioneer Communications of Nevada, Inc., Civ. No. 96-1471-WMB-(RMC) (C.D. Cal. 1996).

This case concerns the sale of 900 number business opportunities. The Commission's complaint alleges that defendants Glen E. Burke, Mike Luther, and Pioneer Communications of Nevada, Inc., violated the Franchise Rule by: (1) failing to provide purchasers with complete and accurate disclosure documents within the time period required by the Rule; and (2) making earnings claims without providing purchasers with an earnings claims document.

F.T.C. v. P.M.C.S., Inc., Civ. No. 96-5426 (E.D. N.Y. 1996).

This case concerns the sale of a medical billing software business opportunity. The Commission’s complaint alleges that defendants P.M.C.S., Inc., Dennis Harmon, and Philip T. Bukowski violated Section 5 by misrepresenting that: (1) purchasers can expect to earn specific levels of income; (2) physicians and dentists provided or recommended by the defendants are ready and willing to purchase the medical billing services; and (3) defendants provide purchasers with significant and valuable assistance in the operation of the business, including training, updated manuals, promotional tapes, comprehensive follow-up support and technical assistance. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide purchasers with complete and accurate disclosure documents within the time period required by the Rule; and (2) making earnings claims without providing purchasers with an earnings claims document.

F.T.C. v. Public Telco Corp., Case No. 95-6635-CIV-KING (S.D. Fla. filed July 10, 1995)

This case concerns the sale of business opportunities for pay telephones. The Commission's complaint alleges that defendants Public Telco Corporation and Ronald Oman violated Section 5 by making numerous misrepresentations to investors, including: (1) the authenticity of references; (2) that locating companies will provide profitable locations for defendants' pay telephones; (3) that locating companies will replace or buy back locations upon request; (4) that consumers can cancel their agreements if they do not receive their telephones within a stated period; and (5) that they will provide significant assistance in the consumer's pay telephone operation. The complaint also alleged that defendants misrepresented that investors would achieve certain sales or profits, such as $57,000 per year with 32 pay telephones, and $200 to $500 per phone per month. In addition, the Commission's complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide prospective franchisees with disclosure documents; (2) failing to provide earnings claims documents; and (3) failing to have a reasonable basis for earnings claims at the times they were made.

F.T.C. v. Robbins Research Intn'l, Inc., Case No. 95-CV-627-H(AJB) (S.D. Cal. filed May 16, 1995)

This case concerns the sale of franchises to conduct motivational seminars and sale of videotapes involving Anthony J. Robbins, a noted motivational speaker. The defendants are Robbins Research International, Inc. and Anthony J. Robbins. The Commission's complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide prospective franchisees with a basic disclosure document within the times required by the Rule; and (2) the making of earnings claims without providing provide prospective franchisees with an earnings claims document. The matter was settled with defendants agreeing to pay $221,260 in consumer redress. Defendants also agreed not to initiate any legal proceeding to collect any monies allegedly due pursuant to their distributorship agreements. Defendants also must refund to each franchisee in the redress class who purchased excess kits the amount of $175 for each excess kit, if returned within 90 days. (Defendants liability for returned excess kits shall not exceed $49,875).

F.T.C. v. Roche, Civ. No. SACV 96-481 LHM (Eex) (C.D. Cal. 1996).

This case concerns a now-defunct snack food vending business opportunity called Allied Snax. The Commission's complaint alleges that the defendant, James L. Roche, violated Section 5 by misrepresenting: (1) that existing Allied Snax purchasers had typically made specific levels of gross or net income; (2) that Roche would provide comprehensive training and support to purchasers; and (3) that Roche would provide the services of individuals who establish accounts that would generate sales consistent with the earnings claims made. The complaint also alleges that the defendant violated the Franchise Rule by: (1) failing to provide purchasers with complete and accurate disclosure documents in a timely manner; and (2) making earnings claims without providing purchasers with an earnings claims document. This case was settled with Roche agreeing to be permanently banned from advertising, promoting, offering for sale, or selling franchises or business opportunities.

F.T.C. v. Sage Seminars, Inc., Case No. C95-2854-SBA (N.D. Cal. filed Aug. 10, 1995)

This case concerns the sale of franchises to conduct "Dreamwalk" motivational seminars. The Commission's complaint alleges that defendants Sage Seminars, Inc., William R. Dempsey, and Peggy Ann Davenport violated Section 5 by misrepresenting: (1) that investors would quickly recoup their initial investment; (2) that investors would earn specified sums of gross earnings; and (3) that investors would be provided with ongoing marketing support and assistance. The complaint also alleges that the defendants failed to provide prospective franchisees with a basic disclosure document within the times required by the Rule; and (2) the making of earnings claims without providing provide prospective franchisees with an earnings claims document.

F.T.C. v. Showcase Distributing, Inc., Case No. Civ-95-1368-PHX-SMM (D. Ariz. filed July 10, 1995)

This case concerns the sale of vending machine and display rack business opportunities. The Commission's complaint alleges that defendants Showcase Distributing, Inc. and Dale Merritt violated Section 5 by misrepresenting: (1) that purchasers would earn specific levels of income or generate specific levels of sales; (2) the reliability of company-selected references; (3) that locators are typically successful in finding profitable locations; and (4) the percentages charged by location owners if the purchasers become associated with a charity. The complaint also alleges that defendants violated the Franchise Rule by: (1) failing to provide prospective franchisees with complete and accurate disclosure documents in a timely manner; and (2) failing to provide an earnings claims document and failing to have a reasonable basis for earnings claims at the time they were made.

F.T.C. v. Silver Shots, Inc., Case No. L-95-2003 (D. Md. filed July 1995)

This case concerns the sale of coin-operated machines called the "Water Bloop" and "Silver Shots Countertop Cash Machine." The Commission's complaint alleges that defendants Silver Shots, Inc., Alan L. Rosofsky, Glenn Rosofsky, and David M. Silverman violated Section 5 by misrepresenting: (1) that purchasers could generate certain levels of revenue or sales, such as $300 per month per machine; (2) that their locator companies are typically successful in finding profitable locations; (3) the willingness of merchants to place the machines in their stores; and (4) that the vending machines comply with applicable state laws, including public use or registration and licensing requirements. The complaint also alleged that defendants violated the Franchise Rule by: (1) failing to provide prospective franchisees with complete and accurate disclosure documents in a timely manner; and (2) failing to provide an earnings claims document and failing to have a reasonable basis for earnings claims at the time they were made. The case was settled with defendants agreeing to pay $80,000 in consumer redress.

F.T.C. v. William Szabo, Civ. No. 96-226-Civ.-Orl-19 (M.D. Fla. 1996).

This case concerns the sale of 900 number business opportunities. The Commission's complaint alleges that William Szabo, individually and dba Gold Leaf Publishing, violated Section 5 by misrepresenting that purchasers typically earn a specific level of income. In addition, the complaint alleges that the defendant violated the Franchise Rule by: (1) failing to provide purchasers with complete and accurate disclosure documents in a timely manner; and (2) making earnings claims without providing purchasers with an earnings claims document.

F.T.C. v. TeleCommunications of America, Inc., Case No. 95-693-CIV-ORL-22 (M.D. Fla. filed July 12, 1995)

This case concerns the sale of business opportunities to sell pay telephones. The Commission's complaint alleges that defendants Telecommunications of America, Inc. ("TCA"), Jon S. Bums, Robert Diew, and Barry Taylor violated Section 5 by making numerous misrepresentations to investors, including: (1) that company-selected references will provide reliable descriptions of the references' experiences with the business venture; (2) that recommended locating companies are successful in placing purchasers' pay telephones in profitable locations; and (3) that purchasers can expect to incur a specific amount of start-up or operating costs. The complaint also alleges that defendants misrepresented that investors would achieve certain sales or profits, such as $3,000 per year for each telephone. In addition, the Commission's complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide prospective franchisees with disclosure documents; (2) failing to provide earnings claims documents; and (3) failing to have a reasonable basis for earnings claims at the times they were made. On July 13, 1995, the court expanded the temporary restraining order to include two TCA successor corporations: North American Bell, Inc. and National Sales and Marketing Group, Inc.

F.T.C. v. Tower Cleaning Systems, Inc., Civ. No. 96 58 44 (E.D. Pa. 1996).

This case concerns a commercial cleaning franchise system. The Commission's complaint alleges that Tower Cleaning Systems, Inc., and David A. Gansky violated Section 5 by misrepresenting that purchasers can reasonably expect to achieve a specific level of earnings, ranging from monthly revenues of $500 to $10,000, or a specific hourly income, such as $15 per hour. In addition, the complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide purchasers with a disclosure document; (2) failing to disclose specific items of information required by the Rule, such as a complete and accurate disclosure of all franchise terminations, reacquisitions, non-renewals, and cancellations for the previous fiscal year; (3) making earnings claims without providing purchasers with an earnings claims document; and (4) failing to return funds or deposits in accordance with contract provisions disclosed in the disclosure document. This matter was settled with the defendants agreeing to a permanent injunction and agreeing to pay $50,000 in consumer redress.

F.T.C. v. United States Business Bureau, Inc., Case No. 95-6636-CIV-Ferguson (S.D. Fla. filed July 10, 1995)

This case concerns an institutional shill, a company posing as a federal agency or national Better Business Bureau that was paid by fraudulent business opportunity vendors to give them a clean bill of health in response to inquiries from potential purchasers. The Commission's complaint contains a single count alleging that the defendant misrepresented the independence and reliability of the reports it provides to consumers in violation of Section 5. The operation of the company by William Robert O'Rourke violated preliminary and permanent injunctions previously entered against him in FTC v. O'Rourke.

F.T.C. v. Worldwide Marketing and Distributing Co., Inc., Case No. 95-8422-CIV-Roettger (S.D. Fla. filed July 10, 1995)

This case concerns the sale of various popcorn vending machines business opportunities. The defendants are Worldwide Marketing and Distribution Co., Tital Management Corp., Mammoth Holding Co., Remote Assembly Corp., Popcorn Supply Co., Popcorn Flavors, Int'l, Royal Imperial Ltd., Int'l Popcorn Distributors, Inc., Maize Vending Associates, Steve F. Gelb, Frank Friedland, and Kevin Feldman. The Commission's complaint alleges that the defendants violated Section 5 by misrepresenting: (1) that purchasers will earn specific level of earnings or generate specific levels of sales; (2) the reliability and low maintenance requirements of the machines; and (3) the reliability of references. The complaint also alleges that the defendants violated the Franchise Rule by: (1) failing to provide prospective franchisees with disclosure documents; and (2) failing to provide earnings claims documents.

F.T.C. v. X.Clusiv Vending, Inc., Case No. C-95-2826-CW (N.D. Cal. filed August 7, 1995)

This case concerns the sale of snack machines and other vending machine business opportunities. The Commission's complaint alleges that defendants X.Clusiv Vending, Inc., Edward A. Durante, and Walter J. Zink violated Section 5 by making numerous misrepresentations to investors, including: (1) that recommended locating companies are successful in placing machines in profitable locations; and (2) that they had a special relationship with beverage and food manufactures that would translate into "brand-name" vending machines, discounted prices, or exclusive territories. The complaint also alleged that defendants made false and misleading statement regarding the investor's potential earnings. In addition, the Commission's complaint alleges that the defendants violated the Franchise Rule by: (1) failing to provide prospective franchisees with disclosure documents; and (2) failing to provide earnings claims documents. This matter was settled with the defendants agreeing to a permanent ban on engaging in, participating in, or assisting others to engage in, any franchise or business venture.

In the Matter of Blenheim Expositions, Inc. FTC File No. 932 3219

In this administrative case, the Commission alleges that Blenheim, a major trade show promoter, misrepresented the results of a Gallup Poll on franchise success rates. According to advertisements allegedly made by Blenheim, the Gallup Poll shows that franchisees enjoy an average pre-tax income of more than $124,000 and a 94 percent success rate. In fact, the Gallup Pool does not support these claims. The matter was settled with Blenheim agreeing not to misrepresent the results of the Gallup Poll or make unsubstantiated franchise success rate claims. In addition, Blenheim agreed to distribute consumer education materials at its shows for the next five years.

United States v. The Acme Vending Co. Case No. 95-6639-CIV-King (S.D. Fla. filed July 10, 1995)

This case concerns the sale of snack and soft drink vending machine business opportunities. The complaint alleges that defendant Acme Vending Co. violated the Franchise Rule by: (1) failing to provide prospective franchisees with complete and accurate disclosure documents in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the times they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. All Snax, Inc., Civ. No. 96-B-2276 (D. Co. 1996).

This case concerns the sale of display rack snack food distributorships. The Commission’s complaint alleges that defendants All Snax, Inc., and Harvey Waters violated the Franchise Rule by failing to provide purchasers with specific items of information required by the Franchise Rule (including a complete and accurate disclosure of the business experience of the franchisor’s directors and executive officers, litigation history, and names and addresses of franchisees and statistical information about franchisees) and by making earnings claims without providing purchasers with an earnings claims document. This matter was settled with the defendants agreeing to pay a $20,000 civil penalty.

United States v. American Vending Group, Inc., Case No. 95-6640-CIV Hurley (S.D. Fla. filed July 10, 1995) (DOJ)

This case concerns a coffee rack-display business opportunity. The complaint alleges that the defendants American Vending Group and Kenneth Sterling violated the Franchise Rule by: (1) failing to provide prospective franchisees with complete and accurate disclosure documents in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the times they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. America's Radio Transmitter, Ltd., Case No. 95-8428-CIV-King (S.D. Fla. filed July 10, 1995)

This case concerns the sale of franchises to market a radio transmitter used to disseminate promotional or informational messages. The complaint alleges that defendants America's Radio Transmitter, LTD., America's Radio Transmitter, Inc., and Leon D. Swichkow violated that Franchise Rule by: (1) failing to provide complete and accurate disclosure documents in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the times they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. Delta Distributors Co., Inc., Case No. 3:95-0502 (S.D.W.V. filed July 10, 1995)

This case concerns the sale of pay telephone franchises. The complaint alleges that defendants Delta Distributors Co. and Steven Harding violated the Franchise Rule by: (1) failing to provide prospective franchisees with disclosure documents; and (2) failing to provide earnings claims documents, failing to have a reasonable basis for earnings claims at the times they were made, or failing to include required cautionary language and other information in conjunction with the earnings claims.

United States v. Firstlight Entertainment, Inc., Case No. 95-1109-CIV-25E (M.D. Fla. filed July 11, 1995)

This case concerns the sale of "collectible" comic book distribution franchises. The complaint alleges that defendants Firstlight Entertainment, Inc. and Michael Peters violated the Franchise Rule by: (1) failing to provide prospective franchisees with complete and accurate disclosure document in a timely matter; and (2) failing to provide earnings claims documents, failing to have a reasonable basis for earnings claims at the times they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. Global Gumballs, Inc., Case No. 95-0539-P-C (S.D. Ala. filed July 10, 1995)

This case concerns the sale of gumball vending machine business opportunities. The complaint alleges that defendants Global Gumballs, Inc., Tim McCarty, and Michelle Smith violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. Health Wave Inc., Case No. 95-1112-CV-T-23B (M.D. Fla. filed July 11, 1995)

This case concerns the sale of snack food vending machine business opportunities. The complaint alleges that the defendants Health Wave, Inc. and Mark Livingston violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. International Champions, Inc., Case No. 195-CV-1751-RCF (N.D. Ga. filed July 10, 1995)

This case concerns the sale of coin-operated video game franchises. The complaint alleges that defendants International Champions and Wayne B. Hunt violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. Island Automated Medical Services, Inc., Case No. 95-1110-CV-717A (M.D. Fla. filed July 11, 1995)

This case concerns the sale of electronic medical claims processing franchises. The complaint alleges that defendants Island Automated Medical Services, Inc. and John Travlos violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. Jani-King Intn'l, Inc., Case No. 3-95-CV-1492-G (N.D. Tex. July 20, 1995)

This case concerned a commercial cleaning franchise. The Commission's complaint alleged that Jani-King International, Inc. violated the Franchise Rule by: (1) failing to disclose completely and accurately the franchisor's litigation history, and (2) failing to disclose the names, addresses, and telephone numbers of existing franchisees. In addition, the complaint alleged that the defendant made earnings claims without providing prospective franchisees with an earnings claims document. The case was settled with Jani-King agreeing not to violate the Franchise Rule and paying a $100,000 civil penalty.

United States v. Life System Associates, Inc., Case No. 95-6642-CIV-Marcus (S.D. Fla. filed July 10, 1995)

This case concerns the sale of food vending machine business opportunities. The complaint alleges that defendants Life Systems Associations, Robert W. Small, Jr., and Particia Small violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. Li'l Snacks, Inc., Case No. 95-0540-CB-C (S.D. Ala. filed July 10, 1995)

This case concerns the sale of food vending machine business opportunities. The complaint alleges that defendants Li'L Snacks and Nava Jo Hartley violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. Kato Makiko, d/b/a/ Infinity Corp., Case No. CV-95-4819-R (C.D. Cal. filed July 21, 1995)

This case concerns the sale of medical billing franchises. The complaint alleges that Kato Makiko violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. Modern Management Systems, Inc., Case No. 95-6643-CIV-Ferguson (S.D. Fla. filed July 10, 1995)

This case concerns the sale of counter top snack vending machine franchises. The complaint alleges that defendants Modem Management Systems Inc. and Margaret Reed Small violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. National Marketing, Inc., Case No. 3-95-639 (D. Minn. filed July 10, 1995)

This case concerns the sale of rack display business opportunities. The complaint alleges that defendants National Marketing Inc. and Paul Woodward violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. National Tech Systems, Inc., Case No. 195-CV-1752-MHS(N.D. Ga. filed July 10, 1995)

This case concerns the sale of a rack display business opportunity selling crime prevention products under the name "Crime Alert. " The complaint alleges that defendants National Tech Systems, Inc. and Mel Parsell violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. Nibblers, Inc., Case No. 95-6641-CIV-Highsmith (S.D. Fla. filed July 10, 1995)

This case concerns the sale of food vending machine business opportunities. The complaint alleges that defendants Nibblers, Inc. and James Juhl violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims. This case was settled with defendants agreeing to pay a $10,000 civil penalty.

United States v. Nu-Idea Technologies, Inc., Case No. 195-CV-1753-GET (N.D. Ga. filed July 10, 1995)

This case concerns the sale of various vending machine business opportunities. The complaint alleges that defendants Nu-Idea Technologies, Film Centers , Mr. Popcorn, Joseph Gilmore, Ron Davis, and T. Randall Bridges violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. Pro-Plastic Design & Marketing, Inc., Case No. 2:95CV-626-S (C.D. Utah filed July 10, 1995)

This case concerns the sale of mint candy vending machine franchises. The complaint alleges that defendants Pro-Plastic Design & Marketing, Inc. and Kirt A. Harris violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. Protocol, Inc., Case No. 3-95-640 (D. Minn. filed July 10, 1995)

This case concerns the sale of personal hygiene product vending machine franchises. The complaint alleges that defendants Protocol, Inc. and David L. Bobert violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. Quartercall Communications, Inc., Case No. 95-935-A (E.D. Va. filed July 10, 1995)

This case concerns the sale of pay telephone business opportunities. The complaint alleges that defendant Quartercall Communications, Inc. and Fitzgerald Lewis violated the Franchise Rule by: (1) failing to provide prospective franchisees with a complete and accurate disclosure document in a timely manner; and (2) failing to provide an earnings claim document, failing to have a reasonable basis for earnings claims at the time they were made, or failing to make required disclosures in immediate conjunction with such claims.

United States v. Software Concepts, Inc., Case No. 95-0070-PHZ-SNM (D. Ariz. filed Apr. 18, 1995)

This case concerns a computer software display rack franchise. The Commission's complaint alleges that defendants Software Concepts, Inc., and James Crabtree, Jr., violated the Franchise Rule by: (1) failing to provide prospective franchisees with a disclosure document; (2) failing to provide identifying information about existing franchisees: and (3) failing to provide prospective franchisees with an earnings claims document. The case was settled with no civil penalty, due to the defendants' lack of financial resources.

United States v. Summit Communications Inc., Case No. 95-1485-CIV-Graham (S.D. Fla. filed July 11, 1995)

This case concerns the sale of pay telephone business opportunities. The complaint alleges that defendants Summit Communications, Inc. and Mitchell R. Newman violated the Franchise Rule by: (1) failing to provide prospective franchisees with a disclosure document; (2) failing to provide identifying information about existing franchisees; and (3) failing to provide prospective franchisees with an earnings claims document.

United States v. Surface Science Corp., Case No. 4:95CV186 (E.D. Tex. filed July 17, 1995)

This case concerns distribution business opportunities to sell a engine lubricant called "Megalon." The complaint alleges that defendants Surface Science Corp. and David J. Kriel violated the Franchise Rule by: (1) failing to provide prospective franchisees with a disclosure document; (2) failing to provide identifying information about existing franchisees; and (3) failing to provide prospective franchisees with an earnings claims document.

United States v. Tutor Time Child Care Systems, Inc., Civ. No. 96-2603 (N.D. Cal. 1996).

This case concerns a day-care center franchise system. The Commission's complaint alleges that the defendants Tutor Time Child Care Systems, Inc., Lifecare Investments Inc., Florida Academic Enterprises, Inc., Michael Weissman, and Richard Weissman violated Section 5 by misrepresenting: (1) that franchisees typically earn a net income of at least $100,000 annually; (2) franchisees will have an operating day-care center within 18 months after paying the initial franchise fee; and (3) the franchisor typically will locate a day-care center in the geographic areas of the franchisee's choice. The complaint also alleges that the defendants violated the Franchise Rule by failing to disclose specific items of information required by the Rule including: (1) currently effective state or federal restrictive orders; (2) the criminal backgrounds of individuals with management responsibilities; (3) the principal occupations and employers for the preceding five years; (4) whether principals or persons with management responsibilities are defendants in actions that allege violations of the Franchise Rule; (5) the terms and conditions of financing arrangements; and (6) the length of time between signing the franchise agreement and operation of the franchise. This mater was settled with the defendants agreeing to pay a civil penalty of $220,000. The agreement also prohibits the defendants from imposing gag orders barring former franchisees from talking about their experiences with the company.