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Premier Franchising Group and its former franchise sales organization, Franchise Fastlane, have agreed to proposed FTC settlements totaling $1.85 million over alleged misleading claims about Premier Martial Arts franchises and alleged Franchise Rule violations. The proposed orders include payments for franchisee compensation, restrictions on future claims and, for certain franchisees, an option to cancel agreements without penalty.
Premier Franchising Group LLC and its former franchise sales organization, Franchise Fastlane LLC, have agreed to proposed settlements requiring them to pay a combined $1.85 million to resolve Federal Trade Commission allegations about Premier Martial Arts franchise sales. The proposed order for the franchisor would also give certain franchisees the option to cancel their agreements without penalty; the settlements are not final unless approved and signed by a federal judge.
The FTC alleges that the companies made misleading and unsubstantiated representations about the Premier Martial Arts (PMA) franchise opportunity. Among the claims cited in the complaint, the companies allegedly told prospective buyers that people without martial arts experience could profitably operate one or more studios on a semi-absentee basis while working fewer than 15 hours a week. These are allegations in the FTC complaint, not findings described as established by a court.
According to the FTC, more than 200 consumers paid Premier Franchising Group an initial franchise fee of at least $49,500. The agency says buyers then incurred hundreds of thousands of dollars in additional expenses to build out and run studios, and many took on significant debt. The complaint says franchisees included veterans.
The FTC also challenges financial performance information in Premier Franchising Group’s 2020–2022 Franchise Disclosure Documents. The agency alleges that the company reported existing studios’ earnings without a reasonable basis to know whether those results represented what new owners could earn. Existing studios were often larger—2,000 to 7,000 square feet—than the 1,200 to 1,600 square feet recommended for new studios, and their owners generally had more martial arts experience, the complaint says.
Costs and Choices for Franchisees
The proposed resolution addresses two points prospective franchise buyers rely on: claims about the time and expertise needed to run a business, and earnings information used to judge whether the investment is viable. The FTC says consumers paid substantial entry fees and then faced additional studio costs, with some assuming significant debt. If approved, the orders would direct money toward compensating franchisees and offer certain existing PMA franchisees a route to exit without a penalty.
The case also sets out the limits the FTC says apply to franchise marketing. A sales pitch about expected earnings or how much time an owner must spend can affect a buyer’s decision, while results from existing locations may not be representative if those businesses differ materially from the proposed model. The agency alleges that the defendants made financial performance representations outside the disclosure documents and failed to disclose relevant differences between existing and prospective studios.
The proposed orders would prohibit both companies from making the misrepresentations at issue, or other material misrepresentations, and require compliance with the FTC Franchise Rule. Their practical effect depends on court approval and the terms of the final orders.
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How the Franchise Claims Arose
Premier Franchising Group is the franchisor behind the PMA martial arts studio opportunity. Franchise Fastlane was its former franchise sales organization. The FTC complaint focuses on how the opportunity was marketed and on information provided before consumers signed franchise agreements. The Franchise Rule governs disclosures and certain sales practices for franchise offers.
The FTC says the studios used as a basis for reported earnings differed from the studios recommended to new buyers in both size and owner experience. Existing locations often ranged from 2,000 to 7,000 square feet, while the recommended footprint for new studios was 1,200 to 1,600 square feet. The complaint also says most new franchisees lacked martial arts experience, while existing franchisees had significant experience. The agency alleges that these differences were not disclosed alongside the earnings information.
The FTC Commission voted 2-0 to approve filing the complaint and proposed orders. The agency filed them in the U.S. District Court for the Eastern District of Tennessee. The FTC’s notice says stipulated final orders have the force of law when a district court judge approves and signs them.
““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.””
— Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection
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Court Approval and Franchisee Eligibility
The proposed orders have been filed, but the FTC’s notice says they acquire the force of law when approved and signed by the district court judge. The source material does not give a date for a hearing or a decision, or say whether the judge has acted since filing.
The FTC says certain franchisees would receive a cancellation option under the proposed order against Premier Franchising Group. The source does not specify which franchisees qualify, when notices would be sent, or how long eligible owners would have to decide. It also does not provide a per-person compensation amount or explain how payments would be allocated.
The FTC complaint describes the conduct as alleged. The source material does not report a court finding on the allegations or provide responses from Premier Franchising Group or Franchise Fastlane. The proposed monetary judgments and other requirements should therefore be understood as settlement terms awaiting court approval.
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Federal Judge Reviews Proposed Orders
The next stated milestone is review by the U.S. District Court for the Eastern District of Tennessee. If the judge approves and signs the stipulated orders, the payment, conduct restrictions, Franchise Rule compliance requirements and any eligible franchisees’ cancellation option would take effect under the final terms.
Under the proposed order, Premier Franchising Group faces a monetary judgment of $3,875,424, with part suspended upon payment of $650,000. Franchise Fastlane’s proposed order requires a $1.2 million payment. The FTC says money paid by both companies will be used to compensate franchisees. The source does not specify a distribution schedule or the amount any individual may receive.
The proposed Premier Franchising Group order also calls for notices to be sent to certain franchisees, offering cancellation without penalty. The FTC’s filing is the available account of the proposed resolution; court action and implementation details will determine how the terms apply.
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Key Questions
What are Premier Franchising Group and Franchise Fastlane agreeing to pay?
The proposed orders require a $650,000 payment by Premier Franchising Group under a partially suspended $3,875,424 judgment, and a $1.2 million payment by Franchise Fastlane. The FTC says payments will be used to compensate franchisees.
What did the FTC allege about the franchise opportunity?
The FTC alleges that the companies made misleading or unsubstantiated claims, including that people without martial arts experience could profitably operate studios on a semi-absentee basis while working fewer than 15 hours a week. The allegations are set out in the complaint.
Can PMA franchisees cancel their agreements?
The proposed order for Premier Franchising Group would offer certain franchisees the option to cancel without penalty. The FTC’s source does not identify which owners qualify or give the notice and decision deadlines.
Are the settlements final?
Not yet according to the FTC notice. The proposed orders were filed in federal court and become stipulated final orders with the force of law when a district court judge approves and signs them.
Source: primary
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