{"id":94,"date":"2024-10-21T18:11:11","date_gmt":"2024-10-21T18:11:11","guid":{"rendered":"https:\/\/blog.dontsaythat.com\/?p=94"},"modified":"2024-10-23T18:16:43","modified_gmt":"2024-10-23T18:16:43","slug":"ftc-announces-an-unusual-settlement","status":"publish","type":"post","link":"https:\/\/blog.dontsaythat.com\/?p=94","title":{"rendered":"FTC Announces An Unusual Settlement"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"94\" class=\"elementor elementor-94\" data-elementor-post-type=\"post\">\n\t\t\t\t<div class=\"elementor-element elementor-element-a9944ec e-flex e-con-boxed e-con e-parent\" data-id=\"a9944ec\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-2f1ba52 elementor-widget elementor-widget-text-editor\" data-id=\"2f1ba52\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div class=\"emailContent ql-container\"><p>Good morning! This is the fourteenth edition of the Compliance Connect newsletter.<\/p><p>The goal is simple: to <strong>keep you in the loop<\/strong> on what the FTC and other regulatory agencies are up to so that you can protect yourself.<\/p><p>These newsletters will land in your inbox twice a week &#8211; Mondays and Thursdays.<\/p><p>Remember: this is NOT legal advice, only information!<\/p><p>Here\u2019s the rundown today\u2026<\/p><ul><li>\ud83e\udd1d <strong>FTC Reaches An Unusual Settlement<\/strong><\/li><li>\ud83d\udd04 <strong>Click To Cancel Rule Watered Down?<\/strong><\/li><li>\ud83d\udea8 <strong>Announcing The 100% FREE 3-Day \u201cGet Compliant\u201d Challenge!<\/strong><\/li><li>\ud83c\udfea <strong>The Franchise Rule Explained In Simple Terms<\/strong><\/li><li>\ud83d\udcca <strong>How Do You Establish &#8220;Typicality&#8221;?<\/strong><\/li><\/ul><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-b5d2cf8 elementor-widget elementor-widget-text-editor\" data-id=\"b5d2cf8\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p style=\"line-height: 1.5; text-align: center;\"><strong style=\"color: #222222; font-family: Arial, sans-serif; font-size: 20px;\">Compliance Digest: What You Should Read Today<\/strong><\/p><p><a href=\"https:\/\/lurnnation.slclktrk009.com\/track\/click?linkData=1-306feyJsaW5rIjoiaHR0cHM6XC9cL3d3dy5yZXN0YXVyYW50YnVzaW5lc3NvbmxpbmUuY29tXC9maW5hbmNpbmdcL2Z0Yy1hY2N1c2VzLXFhcmdvLWNvZmZlZS12aW9sYXRpbmctZnJhbmNoaXNlLXJ1bGVzIiwibmV3c2xldHRlcklkIjoiMTU4OTAiLCJzdWJzY3JpYmVySWQiOjEzNzYyLCJkb21haW4iOiJsdXJubmF0aW9uIiwidHJhY2tpbmdEb21haW4iOiJsdXJubmF0aW9uLnNsY2xrdHJrMDA5LmNvbSIsInRpbWUiOjE3Mjk1MTQ5MTksImRlbCI6OSwic2VuZGVyIjozMjJ9\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>FTC Settles With Qargo Coffee For $30,000 In Unusual Case<\/strong><\/a><\/p><p>The FTC took action against Qargo Coffee for violating the Franchise Rule by failing to disclose critical information to prospective franchisees.<\/p><p>This is a RARE case involving the Franchise Rule, which has only been invoked twice over the past 17 years.<\/p><p>The company did not provide necessary details in its franchise disclosure document, including information about the founder&#8217;s history of filing for bankruptcy.<\/p><p>The FTC also found that Qargo misrepresented certain facts and labeled California franchisees as &#8220;licensees&#8221; without providing proper disclosures.<\/p><p>As part of the proposed settlement, Qargo and its founders will pay $30,000, allow franchisees to rescind contracts, and void noncompete agreements.<\/p><p>The order also requires Qargo to avoid deceptive practices and comply fully with the Franchise Rule moving forward.<\/p><p><a href=\"https:\/\/lurnnation.slclktrk009.com\/track\/click?linkData=1-ef02eyJsaW5rIjoiaHR0cHM6XC9cL2F0aGxldGVjaG5ld3MuY29tXC9jbGljay10by1jYW5jZWwtcnVsZS1neW1zXC8iLCJuZXdzbGV0dGVySWQiOiIxNTg5MCIsInN1YnNjcmliZXJJZCI6MTM3NjIsImRvbWFpbiI6Imx1cm5uYXRpb24iLCJ0cmFja2luZ0RvbWFpbiI6Imx1cm5uYXRpb24uc2xjbGt0cmswMDkuY29tIiwidGltZSI6MTcyOTUxNDkxOSwiZGVsIjo5LCJzZW5kZXIiOjMyMn0\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Gym Owners Claim That Final &#8220;Click To Cancel&#8221; Could Have Been Stricter<\/strong><\/a><\/p><p>On Thursday we talked about the FTC&#8217;s new <a href=\"https:\/\/lurnnation.slclktrk009.com\/track\/click?linkData=1-b9ceeyJsaW5rIjoiaHR0cHM6XC9cL3d3dy5mdGMuZ292XC9uZXdzLWV2ZW50c1wvbmV3c1wvcHJlc3MtcmVsZWFzZXNcLzIwMjRcLzEwXC9mZWRlcmFsLXRyYWRlLWNvbW1pc3Npb24tYW5ub3VuY2VzLWZpbmFsLWNsaWNrLWNhbmNlbC1ydWxlLW1ha2luZy1pdC1lYXNpZXItY29uc3VtZXJzLWVuZC1yZWN1cnJpbmciLCJuZXdzbGV0dGVySWQiOiIxNTg5MCIsInN1YnNjcmliZXJJZCI6MTM3NjIsImRvbWFpbiI6Imx1cm5uYXRpb24iLCJ0cmFja2luZ0RvbWFpbiI6Imx1cm5uYXRpb24uc2xjbGt0cmswMDkuY29tIiwidGltZSI6MTcyOTUxNDkxOSwiZGVsIjo5LCJzZW5kZXIiOjMyMn0\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Click To Cancel<\/strong><\/a> rule, which states that businesses must make it easy to cancel a recurring membership.<\/p><p>This will have a big impact on gyms in particular, who are notorious for making it difficult to cancel a membership.<\/p><p>This article quotes an association of gym owners who claim that <strong>gym owners got some key concessions<\/strong>.<\/p><p>The two biggest concessions were that the new rule&#8230;<\/p><ul><li>Does NOT require businesses to give an annual reminder of the membership<\/li><li>Allows for &#8220;save attempts&#8221; so long as those attempts don\u2019t impede a consumer\u2019s ability to cancel a membership<\/li><\/ul>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-2535da0 elementor-widget elementor-widget-image\" data-id=\"2535da0\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img fetchpriority=\"high\" decoding=\"async\" width=\"854\" height=\"569\" src=\"https:\/\/blog.dontsaythat.com\/wp-content\/uploads\/2024\/10\/uv1kY9u4zoOitzecAlO5URa0MD0BsNfjEXZ6q2UU.jpg\" class=\"attachment-large size-large wp-image-96\" alt=\"\" srcset=\"https:\/\/blog.dontsaythat.com\/wp-content\/uploads\/2024\/10\/uv1kY9u4zoOitzecAlO5URa0MD0BsNfjEXZ6q2UU.jpg 854w, https:\/\/blog.dontsaythat.com\/wp-content\/uploads\/2024\/10\/uv1kY9u4zoOitzecAlO5URa0MD0BsNfjEXZ6q2UU-300x200.jpg 300w, https:\/\/blog.dontsaythat.com\/wp-content\/uploads\/2024\/10\/uv1kY9u4zoOitzecAlO5URa0MD0BsNfjEXZ6q2UU-768x512.jpg 768w, https:\/\/blog.dontsaythat.com\/wp-content\/uploads\/2024\/10\/uv1kY9u4zoOitzecAlO5URa0MD0BsNfjEXZ6q2UU-600x400.jpg 600w\" sizes=\"(max-width: 854px) 100vw, 854px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9e34545 elementor-widget elementor-widget-text-editor\" data-id=\"9e34545\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p style=\"text-align: center; line-height: 1.5;\"><strong style=\"font-size: 20px; color: #222222; font-family: Arial, sans-serif;\">What Is The Franchise Rule?<\/strong><\/p><p>Every franchise that does business in the United States is regulated by the FTC and specific state laws.<\/p><p>The main rule the FTC enforces is the <a href=\"https:\/\/lurnnation.slclktrk009.com\/track\/click?linkData=1-a978eyJsaW5rIjoiaHR0cHM6XC9cL3d3dy5mdGMuZ292XC9sZWdhbC1saWJyYXJ5XC9icm93c2VcL3J1bGVzXC9mcmFuY2hpc2UtcnVsZSIsIm5ld3NsZXR0ZXJJZCI6IjE1ODkwIiwic3Vic2NyaWJlcklkIjoxMzc2MiwiZG9tYWluIjoibHVybm5hdGlvbiIsInRyYWNraW5nRG9tYWluIjoibHVybm5hdGlvbi5zbGNsa3RyazAwOS5jb20iLCJ0aW1lIjoxNzI5NTE0OTE5LCJkZWwiOjksInNlbmRlciI6MzIyfQ\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Franchise Rule<\/strong><\/a>. This is the rule the FTC used against Qargo Coffee.<\/p><p>The case is unusual because this is only the second time the FTC has filed against a company for violating the franchise rule over the past 17 years.<\/p><p><strong>Why Franchises Are Regulated<\/strong><\/p><p>Franchises allow people to run a business using a well-known brand&#8217;s name and systems.<\/p><p>They&#8217;re often marketed as a \u201c<strong>business in a box<\/strong>,\u201d with promises of extensive support to help new franchise owners succeed.<\/p><p>This appeals to individuals who dream of owning a business, but don&#8217;t want to build their own brand from the ground up.<\/p><p>The TRUTH behind those promises is crucial.<\/p><p>Franchisees typically sign long-term contracts and invest significant amounts of money\u2014sometimes even taking on debt\u2014so it\u2019s essential that the franchisor&#8217;s CLAIMS hold up.<\/p><p>Because there&#8217;s an imbalance between the franchisee and the franchisor, the FTC and states believe that there needs to be regulation.<\/p><p><strong>It&#8217;s All About Disclosures<\/strong><\/p><p>The FTC&#8217;s Franchise Rule, along with most state laws, require the franchise company to provide <strong>detailed disclosures<\/strong> to all those thinking of starting that franchise.\u00a0<\/p><p>There are 23 items that must be disclosed, including things like&#8230;<\/p><ul><li>How the model works<\/li><li>Costs involved in buying and running the franchise<\/li><li>Substantiated and typical historical rates of returns<\/li><li>How long it takes to open the franchise<\/li><li>Contact information of current and past franchisees<\/li><li>Any litigation history<\/li><li>Assistance offered by the franchisor<\/li><\/ul><p>Failing to provide these disclosures can result in <strong>massive fines or even losing the ability to be a franchisor<\/strong>.\u00a0<\/p><p>If you are considering the franchise business model, then you need to read up on the Franchise Rule and relevant state laws!<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-c14a7f7 elementor-widget elementor-widget-text-editor\" data-id=\"c14a7f7\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p style=\"text-align: center; line-height: 1.3;\"><strong style=\"color: #222222; font-family: Arial, sans-serif; font-size: 20px;\">Did You Know\u2026<\/strong><\/p><p>Section 18 of the FTC Act gives the FTC the power to create rules that define and prohibit unfair or deceptive business practices<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-de58ebe elementor-widget elementor-widget-text-editor\" data-id=\"de58ebe\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p style=\"line-height: 1.2; text-align: center;\"><strong style=\"font-size: 20px; font-family: Arial, sans-serif; color: #222222;\">Quick Compliance Tip: Typical Results<\/strong><\/p><p>Many businesses misuse customer testimonials. This leaves the door WIDE OPEN for the FTC and other regulators.<\/p><p>One of the most important things that you need to establish BEFORE using a customer testimonial is that it&#8217;s a &#8220;typical&#8221; result and not an outlier.<\/p><p>You need enough evidence that it&#8217;s a &#8220;typical&#8221; result to be able to prove it to a neutral third party.<\/p><p>This is tough to do, but it is possible. Here&#8217;s how to do it&#8230;<\/p><p><strong>1. Survey your customers<\/strong><\/p><p>Create a mechanism to regularly collect feedback from your customers to track their actual results.<\/p><p>You should aim for a reasonable response rate, typically around 10% or higher, which allows for a credible sample size.<\/p><p><strong>2. Substantiate the claims<\/strong><\/p><p>After collecting the data, verify the claims made by customers to ensure they are accurate and not exaggerated.<\/p><p>This might involve reaching out to customers individually for more information.<\/p><p><strong>3. Disclose the process<\/strong><\/p><p>Be TRANSPARENT with your audience. When presenting results, disclose how many people you surveyed, how many responded, and what the actual data shows.<\/p><p>For example, &#8220;We surveyed 1,000 customers, and 100 responded. Of those, 20% made no money, 30% broke even, and 50% made between $1,000 and $5,000.&#8221;<\/p><p><strong>4. Think Ahead<\/strong><\/p><p>Instead of trying to go back and collect data after the fact, which is EXPENSIVE, build data collection into your onboarding process.<\/p><p>For example, companies like Beachbody (formerly P90X) have participants check in throughout their program, providing valuable data points that can be tracked over time.<\/p><p><strong>Consider Using Other Testimonials<\/strong><\/p><p>As you can see, establishing typical results isn&#8217;t easy.<\/p><p>That&#8217;s why we prefer using \u00a0<strong>experience-based or character-based testimonials<\/strong>, which don&#8217;t make any claims and don&#8217;t have to be substantiated.<\/p><p>This can help avoid these risks while still providing valuable social proof.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Good morning! This is the fourteenth edition of the Compliance Connect newsletter. The goal is simple: to keep you in [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":95,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[24],"tags":[18,137,33,19,147,151,152,114,148,143,7,150,149,136,6,140,144,11,145,65,146],"class_list":["post-94","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ftc-compliance-connect","tag-business-compliance","tag-click-to-cancel-rule","tag-compliance-digest","tag-consumer-protection","tag-customer-testimonials","tag-data-collection","tag-dont-say-that-book","tag-false-advertising","tag-franchise-disclosures","tag-franchise-rule","tag-ftc-compliance","tag-ftc-section-18","tag-get-compliant-challenge","tag-lamps-plus-settlement","tag-marketing-compliance","tag-negative-option-offers","tag-qargo-coffee-settlement","tag-regulatory-updates","tag-social-proof","tag-telemarketing-sales-rule","tag-typicality"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>FTC Announces An Unusual Settlement -<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blog.dontsaythat.com\/?p=94\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"FTC Announces An Unusual Settlement -\" \/>\n<meta property=\"og:description\" content=\"Good morning! 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The goal is simple: to keep you in [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/blog.dontsaythat.com\/?p=94\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/profile.php?id=61555269426442\" \/>\n<meta property=\"article:published_time\" content=\"2024-10-21T18:11:11+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-10-23T18:16:43+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/blog.dontsaythat.com\/wp-content\/uploads\/2024\/10\/DST-Blog-Images-3-2.png\" \/>\n\t<meta property=\"og:image:width\" content=\"768\" \/>\n\t<meta property=\"og:image:height\" content=\"432\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Andrew Lantz\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Andrew Lantz\" \/>\n\t<meta name=\"twitter:label2\" 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