Minuteman Press International of Farmingdale, New York, Speedy Sign*a* Rama USA of West Palm Beach, Florida, and their Chairman, Roy Titus, paid the first installment ($2.47 million) of a $3.47 million redress judgment entered against them on July 1, 1999.
The payment is the result of a stipulated judgment entered by the U.S. District Court for the Eastern District of New York which required Minuteman, Speedy, and Roy Titus to pay to the Federal Trade Commission $3.47 million for consumer redress. Redress will be paid to injured Minuteman and Speedy franchisees. Minuteman is one of the nation's largest franchisors of quick print shops and Speedy is one of the largest signmaking franchisors. Entry of the judgment brought to a conclusion one of the largest and longest consumer protection enforcement actions in the history of the Commission.
The Commission filed its complaint against the defendants in June 1993. Two years of intensive discovery followed. After dividing the trial into liability and redress phases, the trial on liability began June 22, 1995 and ended December 21, 1995. Approximately 70 witnesses, including 40 franchisees and several undercover investigators, testified at the liability trial, which covered the defendants' actions between January 1988 and December 1993.
On October 2, 1998, the Honorable Denis R. Hurley, a district court judge for the U.S. District Court for the Eastern District of New York, issued a memorandum and order finding liability against the defendants on all counts. Judge Hurley found that the FTC proved defendants violated the FTC Act and the FTC's Franchise Rule because: (1) representatives of Minuteman and Speedy made false and unsubstantiated claims to prospective franchisees about gross earnings and profits they could expect to achieve by buying and operating the defendants' franchise quick print and sign shops; (2) representatives of Minuteman and Speedy failed to disclose (prior to 1991), at the time of purchase, a significant training/transfer fee imposed on franchisees who later sold their franchises; and (3) defendant Roy Titus had actual knowledge of these illegal activities.
Based on his findings, Judge Hurley entered a permanent injunction against Minuteman, Speedy and Roy Titus on December 18, 1998. The injunction permanently enjoins Minuteman, Speedy and Roy Titus from making any false or unsubstantiated sales or profitability claims concerning existing or new franchises to prospective franchisees. The injunction also permanently prohibits the defendants from collecting any transfer/training fees from franchisees who purchased their franchises prior to 1991, when Minuteman and Speedy first began to properly disclose this fee to prospective franchisees in disclosure documents distributed prior to the purchase of a franchise.
The permanent injunction remains in effect following the entry of the July 1, 1999 judgment.
The July 1, 1999 stipulated judgment required payment of a total of $3.47 million for consumer redress: the $2.47 million payment made today and a second installment of $1 million to be paid within 10 months of the date of entry of the judgment. The judgment also required the defendants to withdraw, with prejudice, their appeal to the U.S. Court of Appeals for the Second Circuit of the December 18, 1998 permanent injunction. Full payment of monetary redress and the defendants' withdrawal of their appeal will bring this matter to a conclusion.
Over the next several months, FTC staff will attempt to contact all persons who purchased franchises from Minuteman or Speedy between January 1, 1988 through December 31, 1993 in an attempt to determine who is eligible for redress and the amount of redress such persons will receive. Current or former Minuteman and Speedy franchisees who purchased their franchises during this time period can assist the FTC staff by leaving their address and telephone number with a special Minuteman/Speedy redress hotline, (202) 326-3771.
Copies of the news release and other documents pertaining to the Minuteman Press case are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 1-877-FTC-HELP (1-877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(Civil Action No.: CV-93-2496 (DRH))