Success Motivation Institute, Inc

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IN THE MATTER OF SUCCESS MOTIVATION INSTITUTE, INC., ET AL. MODIFYING ORDER IN REGARD TO ALLGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-1768. Consent Order luly 1970-Modifying Order, March, 1983 The Federal Trade Commission, having received no objections to a show calise order has reopened this proceeding and modified its order issued on July 14, 1970 (77 G 943), so as to provide prospective franchisees and distributors with more information on sales data, as well as success and failure rates, so that they may better evaluate their chances for success. ORDER REOPENING THE PROCEEDING AND MODIFYING THE DECISION AND ORDER On July 14, 1970, in this matter the Commission issued against respondents Success Motivation Institute, Inc. and Paul J. Meyer, in connection with the sale of franchises or distributorships, in commerce (as "commerce" is defined in the Federal Trade Commission Act), a Decision and Order to Cease and Desist. On December 8, 1982, the Commission issued an order for respondents to show cause why the proceeding should not be reopened and the Decision and Order to Cease and Desist issued on July 14, 1970, should not be modified in a certain respect.

Respondents Success Motivation Institute, Inc. and Paul J. Meyer raised no objection to the proposed modification. Therefore the Commission being of the opinion that the proposed modification will increase the abilty of prospective purchasers to evaluate their chances for success as distributors or franchisees of respondents and, therefore, that the public interest will be served by modi(ying the Decision and Order in this matter as requested It is ordered That the proceeding be, and hereby is, reopened. It is further ordered That the Decision and Order issued on July 14 1970, be, and hereby is, modified by deleting paragraph (3) ofthe order and by substituting for paragraph (4) ofthe order the following (with paragraphs to be renumbered appropriately): (4) Failing to furnish to prospective franchisees or distributors a written tabulation or statistical summary showing, on an accumlative and comparative basis, for each fiscal year, for each of the corporate respondent's operating divisions the following information as it per- Modi(ying Order IOI F. tains to the division of which the prospective franchisee or distributor is considering acquisition of a franchise or distributorship: (a) The median and mean gross sales to respondents' franchisees or distributors exclusive of initial inventories sold to new franchisees or distributors during the fiscal year.

(b) The number offranchisees or distributors at the beginning of the fiscal year, the number appointed during the year, the humber terminated during the year, the number retained at the end of the year and the length oftime that those retained at the end of the year have been respondents' franchisees or distributors. (c) The foregoing information shall be tabulated as a running4-year analysis so that prospective franchisees or distributors wil be furnished such information for the 4 fiscal years immediately preceeding the year in which the information is to be furnished provided that the information for the fiscal year most recently completed prior to the year in which the information is to be furnished will be made available within 45days of the close of the fiscal year. (d) The tabulation will include all franchisees or distributors whether full or part time, whether or not purchases were made during the fiscal year(s) on which the tabulation is based. (e) The information required to be furnished under this paragraph wil be given to prospective franchisees or distributors at the first face-to-face meeting or 10 days before the execution of any franchise or distributor agreement whichever comes first, on a separate document which the prospective franchisee or distributor may keep. 689 Show Cause Order