Categories: ALL POSTSPLANET BEACH FRANCHISETanning Salons

PLANET BEACH Franchise Disclosure Document (FDD)

In our previous post, PLANET BEACH Franchise Warning, we raised concerns about possible red flags encountered while researching the Planet Beach franchise opportunity.

Are you familiar with the Planet Beach franchise opportunity or do you own a Planet Beach franchise? Please share your opinion and experiences – good or bad – with a comment below.

Some of those concerns arose from information supplied by the Planet Beach franchisor itself within the documents known as Franchise Disclosure Documents, or FDDs.

You can view or download the two most recent Planet Beach FDDs here:

2011 Planet Beach Franchise Disclosure Document (FDD)

2012 Planet Beach Franchise Disclosure Document (FDD)

2016 Planet Beach Franchise Disclosure Document (FDD)

According to the FTC, its Franchise Rule requires franchise sellers to provide to prospective purchasers with a current Franchise Disclosure Document. The FTC does not require filings of these documents, so they are unable to provide copies to consumers. A total of 13 states keep franchise offering circulars on file.

There are 23 categories of information that must be provided by the franchisor to the prospective franchisee via the FDD at least 10 business days prior to the execution of the franchise agreement. These categories (or “Items”)include:

Item 1 The franchise company

Item 2 Business experience of franchise executives

Item 3 Litigation

Item 4 Bankruptcy

Items 5, 6 and 7 Initial fees, other fees and initial investment

Item 8 Restrictions on sources of products and services

Item 9 Franchisee’s obligations

Item 10 Financing

Item 11 Franchisor’s assistance, advertising, computer systems and training

Item 12 Territory

Items 13 and 14 Trademarks and patents, copyrights and proprietary information

Item 15 Obligation to participate in the actual operation of the franchise business

Item 16 Restrictions on what the franchisee may sell

Item 17 Renewal, termination,transfer and dispute resolution

Item 18 Public figures

Item 19 Financial performance representations

Item 20 Outlets and franchise information

Item 21 Financial statements

Items 22 and 23 Contracts and receipts

Some areas of obvious concern specific to the Planet Beach franchise are contained in Item 3 (Litigation). Item 19 (Financial Performance Representations), and Item 20 (Outlets and franchise information). In addition to showing the decline in overall units, Item 20 also lists a high number of Planet Beach franchises that were Sold but Not Opened (SNO).

ARE YOU A PLANET BEACH FRANCHISE OWNER OR FORMER FRANCHISEE? ARE YOU FAMILIAR WITH THE PLANET BEACH FRANCHISE OPPORTUNITY? SHARE A COMMENT BELOW.

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Joe Nobody says:

July 24, 2012 at 1:22 pm

James and Lara Barnhill v. Planet Beach Franchising Corporation (AAA No. 69 114 00132 10). On March 12, 2010, franchisee filed a Demand for Arbitration and alleged various breaches of obligations by Planet Beach Franchising Corporation related to computer systems and fees, marketing, evolving franchise concept, product suppliers, and bad faith. The Barnhills seek rescission of the franchise agreements, an unspecified amount of damages, attorney’s fees, and a declaratory judgment. Planet Beach Franchising Corporation filed an answer denying all allegations and brought counter-claims against the Barnhills for enforcement of contractual post-termination obligations, breach of contract, and disparagement. On or around August 29, 2011, the parties reached an amicable resolution, whereby PBFC agreed to pay the Barnhills $365,000 in settlement of all claims.