Recently, the Federal Trade Commission announced that New Hampshire-based GreenHorse Communications, Inc. had settled charges that it fraudulently sold business opportunities.
According to the FTC, GreenHorse and its president, Lynn Haberstroh, placed advertisements for Internet website development franchises in the Boston Globe, the Manchester Union Leader, the New Hampshire Business Review, and the Portland Press Herald. They also ran a website called "Franchise Solutions." The FTC complaint claims that the ads and website promised investors earnings of as much as $134,992 in the first year. The franchises sold for between $14,000 and $15,000.
Under the FTC's Franchise Rule, someone selling a franchise for more than $500 must provide prospective buyers with a disclosure document containing 20 categories of information at the first meeting and ten days prior to the completion of a sale. A company must also provide documentation backing up all earnings claims. The FTC charged that GreenHorse and Haberstroh did not provide customers with a disclosure document and could not support their earnings claims.
To settle these charges, GreenHorse and Haberstroh have agreed to offer refunds and allow future customers to cancel purchases. They are also barred from selling, renting or transferring their customer lists.
Before you even consider buying a business opportunity or franchise, read the FTC's brochures on business opportunities and franchises to learn your rights and what to avoid. Also, check out NFIC's tips for avoiding telemarketed and online business opportunity or franchise scams.
For more information on the Greenhorse settlement, check out the FTC press release.
If you have any questions or would like to report an incident, call NCL's National Fraud Information Center at 1-800-876-7060 or use one of our online forms. 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.
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