American Dental Laboratories, Inc.

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IN THE MATTER OF AMERICAN DE:\TAL LABORATORIES, INC., ET AL. CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-1588. Complaint, Sept. 10, 1969-Decision, Sept. 10, 1969 Consent order requiring Affton, ::10., distributors of toothbrush vending machines and supplies to cease misrepresenting that they will furnish profitable locations to purchasers of their vending machines, that they will train such purchasers, that no soliciting '\vill be required, that they are connected with the du Pont Company or any motel chain, and to cease using the word "Laboratories" in their trade name which misrepresents that they operate a laboratory.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that American Dental Laboratories, Inc., a corporation, and Ed Zenthoefer and Ray Kowalskey, individually and as offcers of said corporation, hereinafter referred to as reSlJondents, have violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. Respondent American Dental Laboratories, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Missouri, with its principal offce and place of business located at 9722 Reavis Park Drive, in the city of Affton, State of Missouri.

Respondents Ed Zenthoefer and Ray Kowalskey are offcers of said corporation. They formulate, direct and control the acts and practices of the corporate respondent, including the acts and practices hereinafter set forth. Their address is the same as that of the corporate respondent.

PAR. 2. Respondents are now, and for some time last past have been, engaged in the advertising, offering for sale, sale and distribution of toothbrush vending machines, disposable toothbrushes and supplies used and dispensed thereby to purchasers for installation in commercial establishments such as offce buildings, hotels, motels, and restaurants for resale to the public. AMERICAN DENTAL LABORATORIES, INC. , ET AL. 375 374 Complaint PAR. 3. In the course and conduct of their business as aforesaid, respondents now cause, and for some time last past have caused, their products, when sold, to be transported from their place of business located in the State of Missouri, or from the places of business of their suppliers, to purchasers thereof located in various other States of the United States and maintain, and at all times mentioned herein have maintained, a substantial course of trade in said products in commerce, as "commerce" is defined in the Federal Trade Commission Act.

PAR. 4. In the course and conduct of their aforesaid business, and for the purpose of inducing the purchase of their products the respondents have made, and are now making, numerous statements and representations in advertisements inserted in newspapers and promotional material with respect to earnings, and business opportunities that can be derived by the purchase of respondents' products.

Typical and mustrative of said statements and representations but not all inclusive thereof, are the following: applications now being accepted for DUPONT DUPONTPROFITABLENEW FRANCHISE OPPORTUNITY MEN or WO IEN A revolutionary hew product developed by Dupont for the mass market is being sold exclusively through automatic merchandising units. This may be exactly the opportunity you ve been looking for to provide a profitable, sccure future for your family while you build independence. * No selling-no experience * Dignified work-full or part time '" We furnish locations! * Invest as little as $998! ,; Investment quickly Returned vVrite today for complete details. Of course there is no obligation, but we feel obligated to assign franchises to the first qualified applicants. So don delay. Write Box D476 Daily Oklahoman for personal interview. Give telephone number in reply.

PART TDm-FL"LL TIME If you have two hours or more a week you can service coin-operated dis pensers offering the new DU POXT DENTIFRICE COATED NYLON BRISTLE TOOTHBRUSHES. (Just wet and brush no toothpaste necessary). Going into motels, offce buildings, restaurants, etc. ))0 sellingno competition. Only product of this type on market. Vle assist in setting up complete operation. Opportunity to earn in excess of $15 000 yearly. Mini mum investment $600. Write Box 25, Tribune-Star. Give telephone number in reply.

Complaint 76 F.

PART TIME BUSINESS If you have 8 to 10 hours a week available you can own a business of your own. Service DU PONT NYLON DISPOSABLE TOOTHBRUSH DIS- PENSERS on location. competition. Only product of this type on the market. Your profit 14if on every toothbrush unit you replace in dispensers. No selling necessary. We secure locations for you. 6 sales daily per machine on a 20-machine route possible to earn $100.80 a week. $500 to $1 000 inventory investment required. Write M. Finn. DU PONT-Executive House 4466 W. Pine St., St. Louis, ?vissouri 63108. PAR. 5. By and through the use of the above quoted statements and representations, and others of similar import and meaning but not expressly set out herein, separately and in connection with the oral statements and representations of their salesmen and representatives, the respondents have represented, and are now representing, directly or by implication that: 1. Respondents furnish to purchasers of their vending machines satisfactory or profitable sales producing locations for the placing of said vending machines, such as leading restaurants, hotels, motels, cocktail lounges, offce buildings and bus terminals. 2. Purchasers investing money in said vending machines and disposable toothbrushes may reasonably expect to earn net profits of approximately $15 000 per year and that said investment may reasonably be expected to be returned out of net profits in one year or less.

3. The purchasers of said machines will be trained by the respondents as to the operation of the machines and the methods to be used in servicing them.

4. No selling or soliciting will be required. 5. The machines purchased by respondents' customers will average seven vends each per day.

6. Respondents' salesmen are representatives of the du Pont Company.

7. Respondents have agreements with Holiday Inns of America and other large motel and restaurant chains whereby these companies wi1 accept respondents' machines in any of their motels or restaurants.

8. Respondents grant exclusive sales territories in which customers may place their toothbrush vending machines. 9. Respondents will deliver their vending machines and supplies within 30 days after the customer signs the contract. 10. Respondents or any other organization are planning to place national advertising relating to the vending machines or AMERICAN DENTAL LABORATORIES, INC. , ET AL. 377 374 Complaint other supplies, or that respondents wil furnish other advertising and promotional assistance.

PAR. 6. In truth and in fact:

1. Respondents do not obtain satisfactory or profitable sales producing locations such as restaurants, hotels, motels, cocktail lounges, offce buildings and bus terminals for the placing of the vending machines purchased from them, but such locations as may be secured by respondents are usually undesirable, unsuitable and un profitable.

2. Purchasers who have invested money in the purchase of said vending machines and supplies do not earn profits approximating $15 000 per year and do not earn suffcient net profits for the return of the investment in one year or Jess, but on the contrary, in most instances, persons purchasing said vending machines and supplies make little or no profit from the operation of the machines.

3. Respondents do not train the purchasers of the vending machines in the operation of the machines or the method to be used in servicing the vending machines where installed. 4. The purchasers of respondents' machines are required to do selling and soliciting, since it is frequently necessary to place machines in other locations because of the undesirable, unsuitable and unprofitable nature of the locations selected by the respondents or for other reasons.

5. Vending machines sold to purchasers by respondents do not average as many as seven vends per machine, per day, but on the contrary, few, if any, of said vending machines sold to purchasers by respondents averaged as much as one vend per day, per n1machine.

6. Since August 1967 neither respondents nor their representatives have had any agreement or any other connection or relationship with the du Pont Company, who, prior to that time, sold to respondents the disposable toothbrush for said vending machines. 7. Respondents do not have an agreement with Holiday Inns of America, or any other motel or restaurant chain whereby individual motels and restaurants wil permit respondents' vending machines to be installed on their premises. 8. Respondents do not grant exclusive sales territories to their customers but, in fact sell the machines to any person in any area who has the required investment to pay for respondents' products.

Complaint 76 F.

9. Respondents do not deliver their machines to customers within 30 days of the time the contract is signed, but often take up to six months or more before such delivery is accomplished. 10. Neither respondents nor any other company has placed or is planning to place any national advertising concerning respondents' vending machines or products. Nor do respondents furnish any other advertising or promotional assistance. PAR. 7. Through the use of the word "Laboratories " as a part of respondents' trade name, respondents represent that they operate a laboratory or are engaged in research in connection with their business. In truth and in fact, respondents do not operate a laboratory and do. no research in connection with their business. Therefore, the aforesaid statement and representation is false, misleading and deceptive.

PAR. 8. In the course and conduct of their business, and at aU times mentioned herein, respondents have been and now are in substantial competition, in commerce, with corporations, firms and individuals engagcd in the sale of vending machines of the same general kind and nature as that sold by respondents. PAR. 9. The use by respondents of the aforesaid false, misleading and deceptive statements and representations and practices has had, and now has, the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that said statements and representations were and are true and into the purchase of substantia! quantities of respondents products by reason of said erroneous and mistaken belief. PAR. 10. The aforesaid acts and practices of respondents, as herein alleged, were and are all to the prejudice and injury of the public and of respondents' competitors and constituted, and now constitute, unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce in violation of Section 5 of the Federal Trade Commission Act. DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Bureau of Deceptive Practices proposed to present to the Commission for its consideration and which, if issued by the Commission, would AMERICAN DENTAL LABORATORIES, INC. , ET AL. 379 374 Decision and Order charge respondents with violation of the Federal Trade Commission Act; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission s Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of thirty (30) days, now in further conformity with the procedure prescribed in 9 2. 34 (b) of its Rules, the Commission hereby issues its complaint, makes the following jurisdictionallindings, and enters the following order: 1. Respondent American Dental Laboratories, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Missouri, with its offce and principal place of business located at 9722 Reavis Park Drive, in the city of Affton, State of Missouri.

Respondents Ed Zenthoefer and Ray Kowalskey are offcers of said corporation and their principal offce and place of business is located at the above stated address.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER I t is o?-dered That respondents American Dental Laboratories, Inc., a corporation, and its offcers, and Ed Zenthoefer and Ray Kowalskey, individually and as offcers of said corporation, and respondents ' agents, representatives and employees, directly or through any corporate or other device, in connection with the advertising, offering for sale, sale or distribution of vending machines and vending machine supplies, or any other merchandise Decision and Order 76 F.

in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: A. Representing, directly or by implication: 1. That respondents will furnish satisfactory or profitable sales producing locations or misrepresenting, in any manner, the sales potential or character of the locations in which respondents place their vending machines and products at the time of the purchase of the machines.

2. That purchasers of respondents' products wil earn any stated amount of gross or net profits or other earnings.

3. The past earnings of respondents ' purchasers: Provided, howeve,' It shall be a defense in any enforcement proceeding instituted hereunder to establish that the past earnings represented are those of substantial number of purchasers and accurately reflect the average earnings of these purchasers under circumstances similar to those of the purchaser or prospective purchaser to whom the representation is made.

4. That the net profits from the operation of said vending m(lGhines will be suffcient to return the investment of the purchaser within one year or misrepresenting any other period of time in which the net profits from the operation of said vending machines wil be sufficient to return the investment of the purchaser. 5. That purchasers of respondents' vending machines will be trained by the respondents as to the operation of the machines or the methods to be used in servicing the locations where insta1Jed.

6. That no sellng or soliciting wil be required. 7. That respondents' vending machines wil average as many as seven vends per day, per machine, or misrepresenting in any manner, respondents' machines average.

8. That respondents or their representatives are connected with the du Pont Company or otherwise misrepresenting respondents' relationship with du Pont or any other company or the source of their merchandise.

AMERICAN DENTAL LABORATORIES, INC. , ET AL. 381 374 Decision and Order 9. That respondents have an agreement with Holiday Inns of America, or any other motel or restaurant chain to accept respondents' vending machines, or otherwise misrepresenting the class or type of locations available to customers of respondents.

10. That respondents grant exclusive sales territories to their customers: Provided, ho'wei)er It shall be a defense in any enforcement proceeding instituted hereunder to establish that exclusive sales territories are in fact granted by respondents.

11. That respondents' machines or other merchandise wil be delivered within thirty (30) days after the contract is signed, or misrepresenHng in any manner the amount of time that wil transpire between the time the contract is signed and the time the merchandise is delivered.

12. That respondents, or any other organization, are planning to place national advertising respecting the vending machines or other merchandise respondents sell or misrepresenting in any manner the promotional or advertising assistance respondents will provide for their customers.

B. Using the word "Laboratories" as part of any business name or representing in any other manner, directly or by implication, that a laboratory is operated by or for the said business, or that the said business differs in any manner from its true nature.

It is further ordered That respondents deliver a copy of this order to cease and desist to all present and future salesmen or other persons engaged in the sale of respondents' products or services, and secure from each such salesman or other person a signed statement acknowledging receipt of said order. It is further ordered That the respondent corporation shall forthwith distribute a copy of this order to each of its operating divisions.

It is further' ordered That the respondents herein shall, within sixty (60) days after service upon them of this order, file with the Commission a report, in writing, settng forth in detail the manner and form in which they have complied with this order. Complaint 76 F.