Premier Martial Arts Franchisor And Its Former Franchise Sales Organization Settle FTC Charges That The Companies Made Deceptive Claims And Violated The Franchise Rule

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Premier Franchising Group and its former franchise sales organization, Franchise Fastlane, agreed to pay a combined $1.85 million to settle Federal Trade Commission allegations of deceptive franchise sales claims and Franchise Rule violations. The proposed orders include compensation for franchisees and give certain Premier Martial Arts franchisees the option to cancel their agreements without penalty.

Premier Franchising Group LLC and its former sales organization, Franchise Fastlane LLC, have agreed to pay a combined $1.85 million to settle Federal Trade Commission allegations that they misled prospective Premier Martial Arts franchisees and violated federal franchise disclosure rules. The proposed settlement also offers certain franchisees a chance to cancel their agreements without penalty, while the allegations remain subject to court approval of the orders.

The FTC’s complaint alleges that the companies made deceptive, unsubstantiated claims about the Premier Martial Arts (PMA) business opportunity. Among them, the firms allegedly told prospective buyers that people without martial arts experience could profitably run one or more studios on a semi-absentee basis, working fewer than 15 hours a week. The FTC says more than 200 consumers paid PFG an initial franchise fee of at least $49,500 after being enticed by the claims.

According to the complaint, franchisees also incurred hundreds of thousands of dollars in additional costs to build and operate studios, and many took on significant debt. The agency says the promotional and financial performance statements were misleading; these statements are allegations in the FTC’s complaint, not findings described as having been made at trial.

The FTC separately alleges that PFG’s 2020–2022 Franchise Disclosure Documents presented earnings information without a reasonable basis to show that existing studios were representative of the businesses new franchisees could expect to run. The complaint points to differences in studio size and operator experience: many existing locations were 2,000 to 7,000 square feet, while PFG recommended 1,200 to 1,600 square feet for new studios; existing franchisees also had substantial martial arts experience, while most new buyers did not.

Refunds and Exit Options for Franchisees

The proposed orders could offer direct relief to franchisees who bought into the system and spent additional money building studios. The $1.85 million in payments from PFG and FFL is intended to compensate franchisees, while the cancellation option could let certain owners leave existing agreements without a penalty. The FTC has not specified in the supplied announcement how much each eligible franchisee might receive.

The case also addresses what prospective franchise buyers are told about earnings, workload and operating conditions. Franchise disclosure documents are meant to provide information before a buyer commits substantial funds. If approved, the orders would prohibit the companies from making the misrepresentations at issue and other material misrepresentations, and require compliance with the Franchise Rule.

Differences Behind the Earnings Claims

The Franchise Rule requires franchisors to provide prospective buyers with prescribed disclosures and governs financial performance representations. The FTC complaint says PFG’s earnings disclosures did not account for meaningful differences between the studios used to report existing earnings and the smaller studios recommended for new owners. It also alleges that PFG failed to disclose those differences and that FFL personnel held management roles in marketing and selling the franchise.

The agency further alleges the companies made financial performance representations outside the figures contained in the FDDs, which the complaint says violated the rule. The FTC’s account describes alleged conduct tied to the PMA opportunity and disclosure documents from 2020 through 2022; it does not establish that every franchisee received the same statements or experienced the same financial outcome.

““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

Court Approval and Franchise Eligibility

The FTC filed its complaint and proposed orders in the U.S. District Court for the Eastern District of Tennessee. The supplied announcement does not say that a judge has approved or signed the orders. The FTC notes that stipulated final orders have the force of law once approved and signed by the district judge.

The announcement does not identify which franchisees qualify for the cancellation option, how they will be notified beyond PFG being required to send a notice to certain owners, or how compensation will be allocated. The proposed financial terms also distinguish between the total judgment against PFG and the amount it must initially pay: PFG faces a $3,875,424 judgment, partially suspended upon payment of $650,000, while FFL is required to pay $1.2 million. The FTC says money paid by the companies will be used to compensate franchisees.

Federal Judge Reviews Proposed Orders

The next formal step is review by the district court. If the judge approves and signs the stipulated orders, their requirements take effect as final court orders. PFG would then have to send the required cancellation notice to eligible franchisees, and the companies’ payments would be used for franchisee compensation under the settlement process.

Franchisees who receive a notice will need to review its terms and any response deadlines to determine whether they qualify and wish to cancel. The FTC announcement does not provide a schedule for the court’s decision, payment distribution or the notice process.

Key Questions

Which companies are part of the proposed settlement?

The companies are Premier Franchising Group LLC, franchisor of Premier Martial Arts, and its former franchise sales organization, Franchise Fastlane LLC.

How much are the companies expected to pay?

The proposed terms require $1.2 million from FFL. PFG faces a $3,875,424 monetary judgment, partially suspended upon payment of $650,000. The FTC describes the combined amount to be paid as $1.85 million.

What did the FTC allege about the franchise opportunity?

The complaint alleges deceptive claims about profitability and operating time, including that people without martial arts experience could profitably run studios on a semi-absentee basis for fewer than 15 hours a week. It also alleges problems with earnings disclosures and other Franchise Rule violations.

Can Premier Martial Arts franchisees cancel their agreements?

The proposed order requires PFG to notify certain franchisees that they may cancel existing agreements without penalty. The announcement does not identify all eligible owners; the proposed orders also need court approval.

Has the settlement become final?

The FTC says it filed the complaint and proposed orders in federal court. Stipulated final orders have the force of law after a district judge approves and signs them; the supplied announcement does not report that this has happened.

Source: primary