Premier Martial Arts Franchisor and its Former Franchise Sales Organization Settle FTC Charges that the Companies Made Deceptive Claims and Violated the Franchise Rule

What happened

Under the proposed settlement with PFG, certain franchisees will be given the option to cancel their franchise agreements without penalty. “Franchisors are legally required to be upfront and honest about earnings potential and the associated risks before franchisees pour their hard-earned money into a franchise opportunity,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection.

According to the FTC’s complaint, PFG and FFL made deceptive and unsubstantiated claims while promoting the PMA opportunity. For instance, the companies deceptively claimed that non-martial artists could profitably operate one or multiple PMA martial arts franchises on a semi-absentee basis working less than 15 hours a week.

These deceptive claims, among others, enticed more than 200 consumers to pay PFG an initial franchise fee of $49,500 or more to purchase a PMA franchise opportunity. Also, most new franchisees had no martial arts experience, and existing franchisees had significant martial arts experience.