---
title: "Big Promises, Bigger Liability: FTC Targets Premier Martial Arts Franchise"
description: An FTC case involving Premier Martial Arts highlights risks in franchise earnings claims and sales practices, with lessons for franchisors and buyers.
image: https://liprestilaw.com/hubfs/Franchise.png
---

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 November 10, 2026

# Big Promises, Bigger Liability: FTC Targets Premier Martial Arts Franchise

![Picture of Michael Hackett, Esq.](https://liprestilaw.com/hs-fs/hubfs/Imported%20sitepage%20images/michael-hackett-02.jpg?width=50&name=michael-hackett-02.jpg) [Michael Hackett, Esq.](https://liprestilaw.com/the-firm-connection/author/michael-hackett-esq)

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Buying a profitable business that requires no industry experience and fewer than 15 hours a week may sound like a great idea. But if the earnings figures behind that pitch are based on experienced owners running a substantially different business, it might be deemed a misleading offer.

That issue is at the center of a Federal Trade Commission (FTC) case involving Premier Martial Arts franchises. There are lessons for businesses selling franchise opportunities, outside sales organizations, and prospective buyers.

- *FTC targets earnings claims and sales practices in Premier Martial Arts franchise case.*
- *Established owners’ results allegedly overstated the opportunity for new franchisees.*
- *Outside sales firms face scrutiny over their role in franchise marketing.*
- *Proposed settlements include $1.85 million in payments and exit rights for certain franchisees.*

The FTC has announced proposed settlements totaling $1.85 million with Premier Franchising Group LLC (PFG) and its former franchise sales and development organization, Franchise Fastlane LLC (FFL), arising from the marketing and sale of Premier Martial Arts franchises.

The case merits attention far beyond the franchise system involved. According to the FTC, the challenged conduct implicates several recurring franchise-compliance risks, including aggressive earnings projections, reliance on financial results from franchisees operating under materially different conditions, sales statements extending beyond the Franchise Disclosure Document (FDD), and the failure to disclose individuals with management responsibilities in connection with franchise sales.

The proposed settlements also underscore an important compliance lesson: outsourcing franchise sales or development functions does not eliminate the franchisor’s disclosure obligations, and third-party sales organizations may face independent regulatory exposure arising from their own sales practices.

**The FTC’s Allegations**

According to the FTC’s complaint, PFG engaged FFL to market and sell Premier Martial Arts franchise opportunities.

The FTC alleges that the defendants promoted the franchise as a business that individuals with no martial arts experience could operate profitably on a “semi-absentee” basis while working fewer than 15 hours per week. More than 200 franchise purchasers allegedly paid an initial franchise fee of at least $49,500. Many then incurred substantial additional expenses for leasing, constructing, staffing, and operating their studios, and some reportedly financed those expenses with significant debt.

According to the complaint, prospective franchisees were given an incomplete and misleading picture of the business opportunity. The FTC contends that the defendants relied on financial results from established franchisees whose experience, facilities, operating history, and contractual arrangements differed materially from those of the new owners being recruited.

Many of the established franchisees whose results were used in sales presentations reportedly possessed significant martial arts experience and operated studios substantially larger than the 1,200-to-1,600-square-foot facilities recommended for new franchisees. These established operators also allegedly enjoyed greater operational flexibility and, in some cases, more favorable economic terms and fewer operating requirements.

The FTC maintains that these differences materially affected the reliability of the earnings information presented to prospective franchisees and that neither PFG nor FFL adequately disclosed them during the franchising sales process.

**Financial Performance Representations Under Scrutiny**

The complaint emphasizes financial performance representations, commonly known as earnings claims.

Under the FTC’s Franchise Rule, a franchisor such as PFG is not required to provide financial performance representations. However, if it elects to do so, it generally must include those representations in Item 19 of the FDD and possess a reasonable basis and written substantiation for such representations when they are made. Subject to limited exceptions, franchise sellers cannot circumvent these requirements by making additional earnings claims during sales calls, presentations, discovery days, or other communications outside the FDD.

According to the complaint, PFG’s 2020 through 2022 FDDs included financial results from existing studios without a reasonable basis to conclude such numbers reliably indicated what new franchisees could reasonably expect to achieve. The FTC further alleges that PFG and FFL personnel made additional financial performance representations that were not included in the applicable FDDs.

FTC allegations concerning PFG’s 2022 FDD highlight practices that potentially mischaracterize the prospects for a new Premier Martial Arts franchise. PFG reported average 2021 earnings before interest, taxes, depreciation, and amortization (EBITDA) to be $75,950 for its 59 studios. This amount, however, combined results for the 38 established franchisee studios with those of the 21 newer franchisee studios. When considered separately for the same periods, the FTC noted that the 21 newer Premier Martial Arts franchisee studios averaged only $17,584 in EBITDA, a difference of more than $58,000 from the combined average presented in PFG’s FDD.

The allegations highlight an important compliance point: historical performance data does not reliably predict future results, even if the underlying figures are accurate. When documenting Item 19 financial performance representations, franchisors like PFG should critically assess whether data being presented for prospective franchisee review provides a reasonable evidentiary basis for particular franchisor representations being made and, further, whether material differences in operator experience, location size, costs, contractual terms, required services, or operating model may require additional disclosures or qualifications.

The FTC’s complaint also asserts claims under Section 5 of the FTC Act based on allegedly deceptive sales representations. Accordingly, even an otherwise compliant FDD does not, by itself, insulate a franchisor or franchise seller from potential liability for misleading statements made during the sales process.

**The Role of the Outside Sales Organization**

The FTC also alleges that PFG failed to identify certain FFL personnel with management responsibilities relating to franchise sales in Item 2 of its 2020 and 2021 FDDs.

According to the complaint, FFL served as PFG’s franchise-development arm and played a substantial role in recruiting and selling franchise opportunities. Its personnel allegedly conducted introductory calls, discussed unit economics, coordinated communications with existing franchisees, participated in discovery-day activities, and assisted prospects with franchise agreements and the transfer of funds. The complaint further alleges that FFL managed PFG’s franchise-development process and that certain FFL personnel were presented as members of the franchise system’s leadership team.

Under the Franchise Rule, Item 2 requires disclosure of the franchisor’s principal officers and other individuals having management responsibility relating to the sale or operation of the franchises being offered. This requirement extends beyond formal corporate titles. Under FTC guidance, sales and operations managers may require disclosure when their responsibilities are such that prospective franchisees would rely on their expertise, formulation of policy, or control of the franchise system in making an investment decision.

Consequently, ordinary franchise brokers or sales representatives are not automatically subject to Item 2 disclosure merely because they participate in franchise sales. However, individuals exercising meaningful management responsibility through outside sales or development organizations may be subject to disclosure regardless of their formal titles or employment relationships. These disclosures also form part of the franchisor’s broader regulatory record and may become significant in subsequent examinations of its sales practices or disputes involving franchisees.

The allegations also highlight the potential exposure facing third-party franchise sales organizations. Participation in preparing, disseminating, or communicating financial performance representations that lack reasonable substantiation, omit material qualifications, or otherwise create a materially misleading impression may create enforcement risk not only for the franchisor, but also for the outside sales organization and potentially its individual personnel.

**Proposed Monetary and Contractual Relief**

Under the proposed order involving franchisor PFG, the court would enter a monetary judgment of approximately $3.875 million, partially suspended upon PFG’s payment of $650,000.

Under a separate proposed order, franchise sales and development specialist FFL would pay $1.2 million. Together, the proposed payments total $1.85 million and are intended to provide monetary relief to affected franchisees.

The proposed orders would also:

- Prohibit misrepresentations concerning earnings, operating requirements, profitability, and other material aspects of a franchise opportunity;
- Require compliance with the FTC’s Franchise Rule; and
- Impose recordkeeping, reporting, and compliance-monitoring obligations.

In addition, PFG would have to notify certain existing franchisees of their right to terminate their franchise agreements without penalty or a termination fee. However, for affected franchisees, simply canceling the franchise agreement would not necessarily eliminate separate obligations to landlords, lenders, or other third parties. For franchisors and their outside sales organizations, the prospect of additional franchisee claims arising from those continuing obligations also underscores the importance of clearly allocating compliance responsibilities, potential liabilities, and indemnification obligations in their own agreements.

**A Broader Compliance Warning**

The FTC’s action against PFG and FFL reminds us that franchise compliance extends well beyond the FDD. Financial performance representations, sales presentations, third-party franchise sales organizations, and claims about owner involvement remain significant regulatory concerns.

For franchisors, practical lessons include regularly evaluating the data and assumptions behind Item 19 representations, reviewing sales presentations and other marketing communications for consistency with required disclosures, and ensuring employees and outside sales organizations are properly trained and supervised. Franchisors should also examine the work performed on their behalf by outside franchise-development firms and their personnel, particularly personnel managing franchise sales or operations, to determine which individuals should be identified in the FDD and whether additional compliance oversight or corrective measures are warranted.

For franchise sales and development organizations, the case reinforces that reliance on a franchisor’s proffer of FDD documentation or background sales materials to the firm does not necessarily eliminate that firm’s independent responsibility for representations made to prospective franchisees.

Ultimately, effective franchise compliance requires more than an accurate disclosure document. It requires that the information communicated throughout the sales process be supportable, appropriately qualified, and consistent with the franchise opportunity actually being offered.

*Michael Hackett is a business and transactional attorney at Lipresti Law. He advises business owners, investors, and growing companies on commercial contracts, financing, mergers and acquisitions, and corporate governance. His experience includes providing legal support to franchisors and national restaurant chains.*

*This article is provided for educational and informational purposes only and does not constitute legal advice. The FTC’s claims are allegations contained in a civil complaint, and the proposed stipulated orders remain subject to approval and entry by the federal court. Businesses should consult qualified franchise counsel regarding their disclosure documents, financial performance representations, sales practices, and relationships with franchise brokers or development organizations*.

[Federal Trade Commission](https://liprestilaw.com/the-firm-connection/tag/federal-trade-commission), [FTC](https://liprestilaw.com/the-firm-connection/tag/ftc), [Franchise](https://liprestilaw.com/the-firm-connection/tag/franchise)

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