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FTC FINAL ORDER IN CASE INVOLVING ALLEGED VIOLATIONS OF HEALTH WARNING
VENDING MACHINE FRANCHISOR PAYS $33,000 CIVIL PENALTY TO SETTLE FTC CHARGES
Local Vending Route
Only $4995 Invest." When potential investors called the toll-free number listed in the ads, FTC said, they were sent a package of promotional materials, including an introductory letter, a publication entitled "Vending ... The Good Life!," a purchase agreement, an audio tape entitled "Vending Overview," and samples of gourmet gumballs. The company offered consumers four different purchase plans: Plan A consisted of eight gumball machines for $9,495; Plan B -- 16 machines for $16,995; Plan C -- 24 machines for $24,995; and Plan D -- 32 machines for $32,000. Prospective purchasers were told that because of the novelty of the gumball machines, they would be able to obtain prime vending locations, according to FTC. FTC alleged that defendants' promotional materials included claims of specific earnings that prospective purchasers could expect to achieve from each vending machine. However, according to FTC's complaint, defendants failed to provide prospective purchasers with an earnings claim document providing written substantiation for the defendants' earnings claims, including the number and percentage of prior purchasers who had earned that much, as the Franchise Rule requires. The complaint also alleged that the defendants failed to provide prospective purchasers with a basic disclosure document that included the names, addresses, and telephone numbers of prior purchasers, as required by the Franchise Rule, to help potential purchasers protect themselves from false profitability claims. In addition to the civil penalty, the settlement bars future violations of the Franchise Rule; false and misleading representations in connection with the sale of business opportunities; and the sale of the defendants' customer lists. The stipulated judgment and order was filed in the U.S. District Court for the District of Colorado, in Denver, and approved by the court on May 18, 2001. NOTE: This stipulated judgment and order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge. (North American Marketing Systems, Inc., FTC Matter No. X000040; Civil Action No. 00-N-317) (NAMS), June 8, 2001.)
TWO DISPLAY RACK FRANCHISORS SETTLE FTC CHARGES
2000 | 2001 | 2002
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