Nibblers, Inc. has agreed to pay a $10,000 civil penalty and both the firm and its president, Thomas Kiernan, have promised to properly and accurately disclose key information to future investors in any franchise or business opportunity they offer. The provisions are included in a settlement of federal charges that the Nibblers and Kiernan failed to provide potential investors with information about the franchise and substantiation for claimed earnings levels, as required by the Federal Trade Commission's Franchise Rule. The defendants' business opportunities involve vending machines to dispense bite-sized candies. Nibblers is based in Boca Raton, Florida.
Charges against Nibblers and Kiernan were filed in July as part of "Project Telesweep," an unprecedented federal/state crackdown on the growing national epidemic of business opportunity fraud. The case was one of more than 80 filed nationwide by the FTC, the U.S. Justice Department, and business opportunity regulators in 20 state securities divisions and attorneys general offices. Law-enforcement officials participating in Project Telesweep also issued an extensive consumer bulletin offering would-be investors tips on how to avoid scams and information about the pre-purchase data they are entitled to receive from franchise sellers.
The complaint against Nibblers and Kiernan alleged that they failed to give investors a required document containing substantiation for the earnings claims they made. In addition, the defendants' basic disclosure documents allegedly did not include the information investors need to properly evaluate the franchise; information that is required by the FTC's Franchise Rule.
The consent order to settle these charges, which requires the court's approval to become binding, would require Nibblers and Kiernan to comply with all aspects of the FTC's Franchise Rule, prohibit them from making false statements or misrepresenting material aspects of any franchise or business venture they offer, and mandate that Nibblers pay a $10,000 civil penalty within 10 days. The consent order also contains various reporting provisions that would assist the FTC in monitoring compliance.
The consent decree was entered on Nov. 1 in the U.S. District Court for the Southern District of Florida by the Department of Justice at the request of the FTC. The Commission vote to authorize filing was 5-0.
NOTE: This consent order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent orders have the force of law when signed by the judge.
Copies of the Project Telesweep Consumer Bulletin, other information about Project Telesweep, and the complaint and consent order in this case are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY 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. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov
(FTC File No. 952 3110)
(Civil Action No. 95-CIV-6641-Highsmith)