Display Rack Vendor Settles FTC Charges

A Texas-based business opportunity operator has agreed to settle Federal Trade Commission charges that he made misleading earnings claims and used deceptive sales tactics to sell distributorships for his business, in violation of federal laws. The settlement will bar Anthony Francis from the sale or marketing of any business opportunity or business venture in the future.

In February 1998, a complaint against Fort Worth, Texas-based QX International and its principal owner, Anthony Francis, was filed on behalf of the FTC by the Department of Justice. The complaint, filed in U.S. District Court for the Northern District of Texas, Dallas Division, alleges that Francis and his company promoted their display rack distributorships by falsely claiming that consumers could earn from $4,000 to $10,000 a month by investing $13,000 to $28,000 in a distributorship. The display racks for QX's automotive lubricants and additives were to be placed in retail stores and other commercial outlets for consignment sale. The defendants claimed that QX would provide advertising and marketing assistance consisting of point-of-sale video and audio tapes and a national advertising campaign, which the complaint alleges the company did not provide.

The government also charges that Francis used shills or business references who, in fact, had not purchased a distributorship. In addition, the complaint alleges that Francis' QX representatives promised consumers that the company would limit the number of distributors in a specific geographic area, but did not do so. The government also alleges that Francis violated the Franchise Rule by failing to provide required disclosure documents.

The stipulated final judgment and order announced today would resolve the charges against Francis. The settlement will bar him from engaging in or assisting others engaged in, the marketing or sale of any business opportunity or business venture in the future. It also will bar him from making any false or misleading statements in connection with the advertising, marketing, promoting, licensing, offering for sale or selling of any goods or services. He will be barred from giving or selling identifying information about persons who purchased a franchise or business venture from him. Finally, the settlement contains record keeping and reporting provisions to allow the FTC to monitor his compliance with the order. The order provides $4 million for consumer redress, which has been suspended based on Francis' financial condition. Payment of consumer redress will remain suspended unless the court finds the defendant misrepresented his financial status.

The Commission vote to accept the proposed consent judgment was 4-0. It was filed and entered by the court Aug. 25, by the Department of Justice at the request of the FTC.

NOTE: This consent judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the complaint and consent 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; 877-FTC-HELP (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.

(FTC File No. X98 0021)
(Civil Action No. 3:98CV453-D)