UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

UNITED STATES OF AMERICA, Plaintiff,

v.

PVI, INC., d/b/a Photo Vend International, a corporation, Defendant.

Case No. 98-6935 CIV-FERGUSON

Magistrate Judge Snow

STIPULATED JUDGMENT AND ORDER FOR PERMANENT INJUNCTION

Plaintiff, the United States of America, acting upon notification and authorization to the Attorney General by the Federal Trade Commission ("FTC" or the "Commission"), has commenced this action by filing the Complaint herein. Defendant PVI, Inc., d/b/a Photo Vend International, has been served with the summons and the complaint. The parties to this action are represented by the attorneys whose names appear hereafter; and the parties agree to settlement of this action without adjudication of any issue of fact or law and without the defendant admitting liability for any of the violations alleged in the Complaint;

THEREFORE, on the joint motion of the parties it is hereby ORDERED, ADJUDGED AND DECREED as follows:

1. This Court has jurisdiction of the subject matter and of the parties pursuant to 28 U.S.C. 1331, 1337(a), 1345 and 1355, and 15 U.S.C. 45(m)(1)(A), 53(b) and 57b.
 
2. The Complaint states a claim upon which relief may be granted against the defendant, under Sections 5(a)(1), 5(m)(1)(A), 9, 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. 45(a)(1), 45(m)(1)(A), 49, 53(b), and 57b.
 
3. The activities of the defendant as alleged in the Complaint are or were in or affecting commerce, as defined in 15 U.S.C. 44.
 
4. Entry of this Stipulated Judgment and Order is in the public interest.
 
5. The defendant enters into this Stipulated Judgment and Order freely and without coercion. Defendant further acknowledges that defendant has read the provisions of this Stipulated Judgment and Order and is prepared to abide by them.
 
6. All parties hereby waive all rights to appeal or otherwise challenge or contest the validity of this Stipulated Judgment and Order.

DEFINITIONS

For the purpose of this Stipulated Judgment and Order, the following definitions shall apply:

1. The "Franchise Rule" is the Federal Trade Commission's Trade Regulation Rule entitled "Disclosure Requirements and Prohibitions concerning Franchising and Business Opportunity Ventures", 16 C.F.R. Part 436.
 
2. "Franchise" and "Franchisor" are defined in Section 436.2(a) of the Franchise Rule, 16 C.F.R.  436.2(a), (c), and includes "business opportunity ventures" as discussed in the FTC's Final Interpretive Guide for the Franchise Rule, 44 Fed. Reg. 49966 (August 24, 1979). The term "franchise" in this Stipulated Judgment and Order shall also encompass any successor definition in any later trade regulation rule promulgated by the Commission.
 
3. "UFOC format" is defined as the Uniform Franchise Offering Circular format which has been adopted by the North American Securities Administrators' Association and accepted by the Commission for use in lieu of the Franchise Rule's disclosure format.
 
4. "Franchise broker" is defined in Section 436.2(j) of the Franchise Rule, 16 C.F.R. 436.2(j). The term "franchise broker" in this Stipulated Judgment and Order shall also encompass any other entity through which the franchisor sells franchises, including, but not limited to, subfranchisors, master franchisees, or regional franchisees.
 
5. "Business venture" is defined as any written or oral business arrangement, however, denominated, whether or not covered by the Franchise Rule, which consists of the payment of any consideration for:

a. the right or means to offer, sell, or distribute goods or services (whether or not identified by a trademark, service mark, trade name, advertising, or other commercial symbol); and

b. more than nominal assistance to any person or entity in connection with or incident to the establishment, maintenance, or operation of a new business or the entry by an existing business into a new line or type of business, including, but not limited to, recommendations of companies providing location services.

6. "Telemarketing" means the advertising, offering for sale, or sale of any good or service to any person by means of telephone sales presentations, either exclusively or in conjunction with the use of other advertising.

ORDER

I.

IT IS ORDERED, ADJUDGED AND DECREED that only the defendant, its successors, assigns, officers, agents, employees, attorneys, servants, franchise brokers, and those persons in active concert or participation with them who receive actual notice of this Stipulated Judgment and Order by personal service or otherwise, whether acting directly or through any business entity, corporation, subsidiary, division or other device, in connection with the advertising, offering for sale, licensing, contracting, sale or other promotion, in or affecting commerce, of a franchise, be and are:

a. hereby permanently restrained and enjoined from operating, promoting, offering for sale, or selling the franchise or business opportunity venture known as the "Sticker Club", which is the subject of this lawsuit, or any similar franchise or business opportunity venture, unless and until PVI, Inc., d/b/a Photo Vend International, comes into compliance with the Franchise Rule as promulgated or as it may hereinafter be amended; and,
 
b. hereby permanently restrained and enjoined from violating, or assisting others to violate any provisions of the Franchise Rule as promulgated or as it may hereinafter be amended.

II.

IT IS FURTHER ORDERED that only defendant, its successors, assigns, officers, agents, employees, attorneys, servants, franchise brokers, and those persons in active concert or participation with them who receive actual notice of this Stipulated Judgment and Order by personal service or otherwise, whether acting directly or through any business entity, corporation, subsidiary, division or other device, in connection with: 1) advertising, offering for sale, licensing, contracting, selling or otherwise promoting, in or affecting commerce, of a franchise, 2) telemarketing, or 3) offering for sale or the sale of any franchise or business venture, are hereby permanently restrained and enjoined from making any false or misleading statement or representation of material fact, whether directly or by implication, or orally or in writing, concerning any franchise or any product, service, or business venture, including but not limited to any or all of the following:

a. the income, profit, or sales volume that an investor may or is likely to achieve;
 
b. the income, profit or sales volume allegedly achieved by other investors;
 
c. the length of time that it may or will take to recoup the purchase price of the business venture;
 
d. the independence or authenticity of any references;
 
e. the territorial rights to, or amount of competition within, any geographic territory;
 
f. the availability or existence of profitable locations for investors; or,
 
g. assurances, refunds or guarantees of profitability that may be made by any location service or company that investors may elect to use.

III.

IT IS FURTHER ORDERED that defendant shall pay to the plaintiff, pursuant to Section 5(m)(1)(A) of the Federal Trade Commission Act, 15 U.S.C. 45(m)(1)(A), a civil penalty. Defendant shall pay a civil penalty in the amount of eleven thousand dollars ($11,000.00). Defendant shall provide the civil penalty amount to its undersigned attorney, Andrew Cove, on or before July 5, 1999. Mr. Cove shall hold the money in escrow until this Stipulated Judgment and Order is entered. Within five (5) days of receipt of notice that this Stipulated Judgment and Order has been entered, Mr. Cove shall make the payment to the plaintiff required by this Paragraph. Payment shall be made by certified or cashier's check made payable to the Treasurer of the United States and delivered to the Director, Office of Consumer Litigation, Civil Division, P.O. Box 386, Washington, D.C. 20044. The cover letter accompanying the check shall include the title of this litigation and a reference to DJ# 102-2968. In the event the defendant defaults on the payment required to be paid by this Paragraph, the entire unpaid civil penalty due from the defendant, together with interest computed under 28 U.S.C. 1961 -- accrued from the date of default until the date of payment -- shall be immediately payable.

IV.

IT IS FURTHER ORDERED that for five (5) years after the date of entry of this Stipulated Judgment and Order, or for so long as PVI, Inc., d/b/a Photo Vend International, or its successors and assigns, sell business ventures or engages in telemarketing, whichever period is shorter, PVI, Inc., d/b/a Photo Vend International, shall notify the Commission at least thirty (30) days prior to any proposed change in PVI, Inc., d/b/a Photo Vend International, including, but not limited to, dissolution, assignment, or sale resulting in the emergence of a successor corporation, or any other change in the corporation which may affect any compliance obligation arising out of this Stipulated Judgment and Order. The notice required by this Paragraph shall be sent to the following: Associate Director, Division of Marketing Practices, Federal Trade Commission, Room H238, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

V.

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Stipulated Judgment and Order, or for so long as it continues to offer and sell business ventures or engage in telemarketing, whichever period is shorter, only defendant, its successors, assigns, officers, agents, employees, attorneys, servants, franchise brokers, and those persons in active concert or participation with them who receive actual notice of this Stipulated Judgment and Order by personal service or otherwise, are hereby restrained and enjoined from failing to create and maintain:

a. Records containing the name, address, telephone number and social security number of each person employed by the defendant in any capacity, that person's job title or position, the date upon which the employee commenced work, and the date and reason for the employee's termination, if applicable;
 
b. Records containing the name, address, and telephone number of each person who purchases a business venture from the defendant;
 
c. Records of every written or oral customer complaint or refund request received by the defendant, including 1) the customer's name, address, and telephone number, 2) the amount the customer paid for the business venture, 3) the written complaint or refund request, 4) the basis of the complaint or refund request, 5) the results of any investigation of the validity of the complaint or refund request, 6) a record of the response to each complaint or refund request, and 7) a record of the final resolution of the complaint or refund request.
 
d. Copies of all sales scripts, training materials, advertisements, or other marketing materials utilized; provided that copies of all sales scripts, training materials, advertisements, or other marketing materials utilized shall be retained for three (3) years after the last date of dissemination of any such materials.

VI.

IT IS FURTHER ORDERED that for the purposes of determining or securing compliance with this Stipulated Judgment and Order, and subject to any legally recognized privilege, the defendant, for a period of five (5) years from the date of entry of this Stipulated Judgment and Order, or for so long as it continues to offer and sell business ventures or engage in telemarketing, whichever period is shorter, shall, upon reasonable written notice,

a. permit, during normal business hours, representatives of the FTC access to the offices of any business owned or controlled in whole or in part by PVI, Inc., d/b/a Photo Vend International, and make available to representatives of the Commission, for inspection and copying, business records evidencing compliance with the terms of this Stipulated Judgment and Order, and
 
b. without restraint or interference, permit representatives of the FTC to interview officers, employees, and agents (who may have counsel present) regarding compliance with the provisions of this Stipulated Judgment and Order.

VII.

IT IS FURTHER ORDERED that, except to comply with a request or order of a government or court, or requirement of the Franchise Rule or other applicable law or regulation, the defendant is hereby permanently enjoined and restrained from providing or transferring to any person the name, address or telephone number of any person who purchase or purchased a business opportunity venture from the defendant or any of its agents, representatives, brokers or employees.

VIII.

IT IS FURTHER ORDERED that the defendant shall, within thirty (30) days of the entry of this Stipulated Judgment and Order, provide a copy of this Stipulated Judgment and Order and of the Franchise Rule to each corporate officer, and to each employee, agent and franchise broker engaged in the marketing or sale of franchises. Defendant shall obtain from each such officer, employee, agent and franchise broker, a written statement, acknowledging receipt of a copy of the aforesaid documents. Defendant shall, within ten (10) days of complying with this paragraph, serve upon the FTC, an affidavit setting forth the fact and manner of its compliance, including the name and title of each person to whom a copy of this Stipulated Judgment and Order has been provided. The notice required by this Paragraph shall be addressed to the Associate Director, Division of Marketing Practices, Federal Trade Commission, Room H238, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

IX.

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for the purpose of enabling the parties to apply to the Court at any time for such further orders and directions as may be necessary or appropriate for the interpretation, modification or enforcement of this Stipulated Judgment and Order, or for the punishment of violations thereof.

X.

Defendant agrees that this Stipulated Judgment and Order does not entitle defendant to seek or to obtain attorneys' fees as a prevailing party under the Equal Access to Justice Act, 28 U.S.C.  2412, and defendant further waives any rights to attorneys' fees that may arise under said provision of law.

XI.

The parties, by their respective counsel, hereby consent to entry of the foregoing Stipulated Judgment and Order which shall constitute a final judgment and order in this matter. The parties further stipulate and agree that the entry of the foregoing Stipulated Judgment and Order shall constitute a full, complete and final settlement of this action. The parties further stipulate that this Stipulated Judgment and Order embodies all of the agreements among the parties and that the parties are have not relied upon any representations or statements not included herein.

ANDREW N. COVE
Cove & Associates
National Bank Building
Suite 100
3801 Hollywood Blvd.
Hollywood, Florida 33021Attorney for Defendant, PVI, INC., d/b/a Photo Vend International

JOSEPH GARRITY
Cove & Associates
1515 University Drive -Suite 108
Coral Springs, Florida 33071
Attorney for Defendant, PVI, INC., d/b/a Photo Vend International

DAVID W. OGDEN
Acting Assistant Attorney General
Civil Division
U.S. Department of Justice

THOMAS E. SCOTT
United States Attorney
Southern District of Florida

BARBARA PETRAS
Assistant United States Attorney
Florida Bar No. 209181
United States Attorney's Office
500 E. Broward Blvd., Rm. 700
Ft. Lauderdale, FL 33394
(954) 356-7314
(954) 356-7180 fax

KAREN M. VALENTINE
DOUGLAS ROSS
Trial Attorneys
Office of Consumer Litigation
Civil Division
U.S. Department of Justice
P.O. Box 386
Washington, D.C. 20044
(202) 514-0514
(202) 514-8742 fax

SO ORDERED this day of , 1999.

Wilkie D. Ferguson, Jr.
UNITED STATES DISTRICT JUDGE