Premier Martial Arts FTC Settlement and the Item 19 Sample

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On October 5, 2026, the Federal Trade Commission announced a $1.85 million Premier Martial Arts FTC settlement with franchisor Premier Franchising Group and its former franchise sales organization, Franchise Fastlane. The FTC alleges the brand's Item 19 earnings figures came from established studios that looked little like the ones new buyers were told to open. If you underwrite systems off Item 19, read this complaint.

What Premier Franchising Group and Franchise Fastlane agreed to

The FTC filed its complaint on October 5 in the U.S. District Court for the Eastern District of Tennessee (Case No. 3:26-cv-00487). The Commission vote was 2-0. Both companies signed stipulated orders, meaning settlements agreed by both sides that become binding once the judge signs them. As of publication, the case page lists the matter as pending.

The confirmed terms, per the FTC:

  • Premier Franchising Group (PFG): a $3,875,424 monetary judgment, partially suspended upon payment of $650,000. A suspended judgment is one the defendant doesn't have to pay in full unless it breaches conditions set in the order.
  • Franchise Fastlane (FFL): a $1.2 million payment.
  • Money goes to compensate franchisees.
  • PFG must notify certain franchisees that they can cancel their franchise agreements without penalty.

Neither company admitted the allegations, according to Franchise Times. The outlet also reports this is the first time the FTC has pursued a third-party franchise sales organization (FSO), an outside firm a franchisor hires to recruit and close buyers, for a Franchise Rule violation.

The allegations, which remain allegations: more than 200 consumers paid an initial franchise fee of $49,500 or more after being told non-martial artists could run studios profitably on a semi-absentee basis. The complaint quotes an introductory call pitching the model as "8 to 12 - maximum 15 hours - a week." It also alleges breakeven claims that appeared in no FDD, and says the 2020 and 2021 FDDs failed to name FFL personnel with management responsibility in Item 2.

Unleashed Brands, which bought Premier Martial Arts in December 2021, told Franchise Times the matter concerns practices from before the brand joined its platform. FFL CEO Heather Harris said the people involved in the PMA sales process no longer work at the company.

What the Premier Martial Arts FTC settlement says about Item 19 samples

Item 19 is where a franchisor discloses any financial performance representation (FPR), meaning any statement about actual or potential sales, income or profit. Under the FTC Franchise Rule, a franchisor that makes an FPR must have a reasonable basis for it and must put it in Item 19.

The FTC's core theory is about who was in the sample. PMA grew partly by converting existing martial arts schools. The complaint calls them Legacy studios. Per the FTC, those owners often ran 2,000 to 7,000 square foot studios and had significant martial arts experience. New franchisees were steered to 1,200 to 1,600 square feet, and most had no martial arts background.

Royalty terms differed too. The complaint says Legacy franchisees paid $1,000 a month while new franchisees paid 7% of gross sales. My math: at the $548,345 average gross the 2022 FDD reported for its top 15 studios, 7% is about $38,384 a year against $12,000 on the flat fee. That gap lands straight on EBITDA (earnings before interest, taxes, depreciation and amortization).

The 2022 FDD built its figures from 59 franchised studios open all of 2021. Per the complaint, it excluded nine company-owned studios, four licensed studios, 72 franchised studios not open the full year and 31 with incomplete data. The disclosed average EBITDA was $75,950, with a median of $89,140.

The complaint alleges PFG's own records showed new franchisees averaged $17,584 in 2021 EBITDA, with a median of $28,347. The bottom seven averaged a loss of $55,319.

The 2021 FDD allegations go further than sample design. The complaint says only 22 of 47 Legacy studios with full 2020 records were included, and that the "Low" cohort's reported average net income of $90,204 compares with $25,167 in PFG's records.

Five checks to run on any Item 19 before you rely on it

  1. Reconcile the sample to Item 20. Take the Item 19 unit count and every exclusion, then tie it to the Item 20 outlet totals for the same year. If 116 units fall outside the sample, you want to know why each bucket exists.
  2. Match the cohort to the unit you're buying. Check Item 1 for conversion or legacy history, Item 6 for different royalty terms, and Item 11 for the site size being recommended. Older units on better terms will flatter the table.
  3. Read the Item 20 pipeline. Franchise Times reports PMA said it had sold 564 franchises to 228 owners at the time of the Unleashed deal, had about 272 locations in June 2023, and now lists 115 on its website. The complaint says the average franchisee bought three locations between 2019 and 2021. Signed-not-opened counts and multi-unit development agreements belong in the same model.
  4. Map the sales channel. Item 2 should name everyone with management responsibility over franchise sales. If an FSO or broker is involved, ask for its contract term and any government orders, and check Item 3 for franchisee suits.
  5. Call franchisees who opened recently. Pull names from the Item 20 list of current and former franchisees, then filter for owners who match the profile being sold today. Ask about hours worked, not just revenue.

Our franchise directory of 1,700+ FDDs lets you compare Item 19 sample sizes against Item 20 outlet counts across a category, which makes outliers easier to spot.

What the court filings don't tell us yet

  • The orders still need the judge's signature.
  • The FTC didn't say how many franchisees will receive the cancellation notice, or how the $1.85 million will be divided among them.
  • We haven't reviewed PMA's current FDD, so we can't say how its Item 19 is built today.
  • Franchise Times references a separate franchisee lawsuit against PMA and Unleashed filed nearly four years ago. Its status wasn't covered in this week's reporting.
  • Whether franchisors will start disclosing settlements involving their outside sales firms is open. Michael Seid of MSA Worldwide argued on October 6 that, from a business view, they should, and pointed (as background) to the NASAA Model Franchise Broker Registration Act adopted May 4, 2026.

Read the Item 19 footnotes before the table

Most Item 19 reviews start with the averages. In this case, as alleged, the averages were the least informative part. The footnotes defining which studios counted, and which 116 didn't, carried the real signal about what a new owner could expect.

For buyers, lenders and sponsors, the practical change is small and specific: treat sample construction and the sales channel as diligence items with the same weight as the earnings table. This settlement involves PMA's 2019 to 2022 sales. It says nothing about other brands or other sales firms.

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