Robbins Pays More Than $220,000 To Settle Alleged Franchise Rule Violations
FOR RELEASE: MAY 16, 1995
ANTHONY ROBBINS AGREES TO PAY MORE THAN $220,000
IN CONSUMER REDRESS TO SETTLE ALLEGED FRANCHISE RULE VIOLATIONS
Motivational speaker Anthony J. Robbins and his company,
Robbins Research International, Inc., have agreed to settle
Federal Trade Commission charges that they misrepresented the
potential earnings of those who bought their franchises for
motivational seminars. According to the FTC, prospective
franchisees paid Robbins Research International (RRI) fees
ranging from $5,000 to as much as $90,000 for the rights to
conduct -- and charge admission for -- seminars featuring
videotapes of Robbins presenting his motivational techniques.
To resolve the FTC allegations, RRI and Robbins have agreed to
pay $221,260 in redress to franchisees, and to buy back seminar
kits that franchisees purchased in addition to those initially
supplied under the franchise arrangement. RRI and Robbins also
would be prohibited from violating the FTC's Franchise Rule in
The FTC's Franchise Rule requires a franchisor to provide
prospective franchisees with a complete and accurate basic
disclosure document containing 20 categories of information,
including the history of the franchisor, its managers, litigation
history, and information about other franchisees. If a
franchisor chooses to make earnings claims, the rule requires it
to have a reasonable basis for those claims and to provide a
document to prospective franchisees to substantiate them.
The FTC's complaint detailing the charges in this case
states that defendants Robbins and RRI advertised, promoted and
sold franchises to consumers across the United States. The
franchises were to conduct seminars featuring Robbins' "Unlimited
Power" and "Power to Influence" motivational video tapes. The
defendants also furnished new franchisees with a certain number
of seminar kits that contained audio tapes and printed materials
for the seminars.
The complaint alleges that the defendants failed to provide
prospective franchisees with the basic disclosure document as
required by the rule. In addition, the complaint alleges the
defendants represented that the franchisees could sell 25 to 100
seminars per month and could earn between $75,000 to $300,000 per
year. In fact, according to the complaint, few if any
franchisees have been able to sell that many seminars or make
these earnings. The defendants also allegedly failed to provide
the earnings claims substantiation document required by the rule.
The proposed consent decree to settle these charges, which
requires court approval, would prohibit the defendants from
violating the Franchise Rule in the future. Further, the
defendants have agreed to pay $221,260 into an escrow account to
provide redress to franchisees who have not previously settled
with the defendants. In addition, the defendants would
repurchase for $175 each -- up to a maximum of $49,875 -- any
unused kits franchisees purchased from the defendants above and
beyond those initially provided.
The FTC filed the complaint and proposed consent decree in
the U.S. District Court for the Southern District of California,
in San Diego yesterday. The Commission vote to file the
complaint and consent decree was 5-0. The FTC's Atlanta Regional
Office handled the investigation.
NOTE: A consent decree is for settlement purposes only and does
not constitute admission of a law violation. A consent decree
has the force of law when signed by the judge.
The FTC has available a brochure, A Consumers Guide to
Buying a Franchise, to help consumers who are considering the
purchase of a franchise.
Copies of the complaint and proposed consent decree, and the
consumer brochure, are available from the FTC's Public Reference
Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W.,
Washington, D.C. 20580.
(Civil Action No. 95-CV-627-H (AJB))
(FTC File No. 922 3054)