Tuesday, February 8, 2022
Bureau of Consumer Protection: Deceptive and Misleading Conduct with Franchises, Business Opportunities, and Investments
The FTC has filed a complaint against Burgerim, a fast-food chain, alleging that the chain and its owner enticed more than 1,500 consumers to purchase franchises of the chain using false promises while withholding information required by the FTC’s Disclosure Requirements and Prohibitions Concerning Franchising (“Franchise Rule”). The FTC alleges that some of the false promises include recruiting potential franchisees, including veterans, by pitching the franchise opportunity as “a business in a box,” that required little to no business experience. According to the complaint, many consumers paid Burgerim between $50,000 and $70,000 in franchise fees and Burgerim pocketed tens of millions of dollars in such fees, despite the fact that the majority of the people who paid them were never able to open restaurants. Some franchisees were unable to obtain promised refunds even after months of making requests, leaving franchisees facing losses or debt of tens of thousands of dollars each. The complaint also alleges violations of the “Franchise Rule” which requires franchisors to provide prospective franchisees with material information they need when weighing the risks and benefits of purchasing a franchise, including a Franchise Disclosure Document, which includes specified information about the franchisor, the franchise business, and the terms of the franchise agreement. The complaint alleges that Burgerim and its owner failed to provide accurate information about the refundability of franchise fees and required information about current and former franchisees. Burgerim and its owner are facing monetary and non-monetary damages.
Wednesday, February 9, 2022
Bureau of Consumer Protection: Deceptive Telemarketing Tactics
The FTC has filed a complaint against American Vehicle Protection Corp. and related defendants who have allegedly defrauded hundreds of thousands of consumers out of more than $6 million over the last four years. The complaint alleges that the defendants misrepresented that they either are, or are associated with, the consumers’ vehicle manufacturer or dealer. In addition, the complaint alleges that the defendants’ telemarketers made false promises that they could provide “bumper to bumper” or “full vehicle” coverage for prices ranging between $2,800 and $3,400. The FTC argues that these actions violate the Telemarketing Sales Rule and the Do-Not-Call Registry Rule. The defendants are facing monetary and non-monetary damages.