Premier Franchising Group & Franchise FastLane settle with FTC

This Monday, the Federal Trade Commission announced it has reached a $1.85 million settlement agreement with Premier Franchising Group and Franchise FastLane LLC, PFG’s franchise development partner. The FTC determined both groups violated the Franchise Rule and were misleading in their dealings with potential franchisees in regard to the Premier Martial Arts brand.

The FTC’s official release outlines that PFG and Franchise FastLane allegedly sold more than 200 Premier Martial Arts franchises using deceptive claims, including telling prospective franchisees that they could run the business successfully on a part-time absentee basis with no background in martial arts. Furthermore, regulators found that Premier Martial Arts’ FDDs were deceptive from 2020-2022 because the “current operators” whose earnings were reported allegedly did not operate the same kind of studios that franchisees would be opening.

According to the FTC, PFG and Franchise FastLane were not fully transparent with potential franchisees about their relationship and allegedly failed to disclose that Franchise FastLane team members had management roles in the marketing and sales of Premier Martial Arts. Of note, the announcement marks the first time the FTC has taken action against a third-party franchise sales organization for Franchise Rule violations.

“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. “The FTC will continue to take action to protect small businesses and franchisees and hold those that break the law accountable.”

“IFA applauds the FTC’s action, which makes clear that the Franchise Rule applies to everyone involved in selling a franchise, including franchise sales organizations and other third-party franchise sellers,” said Matt Haller, IFA president and CEO. “Every prospective franchisee deserves a full and accurate picture of their investment, the risks, and the people involved so they can effectively do their due diligence before making a decision, while brands and their sales agents have a shared interest in that responsibility to ensure franchisor-franchisee relationships are established on a foundation of transparency… Chairman Ferguson and Director Mufarrige [of the FTC] committed to enforcing existing law rather than writing new rules, and they have delivered. We thank them for working with the franchise community and holding a high bar for accountability.”